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Jul 15, 2024
Marion Dovis, Chahir Zaki
Global Value Chains and Local Business Environments: Which Factors Really Matter in Developing Countries?
This study assesses the effect of an economy’s business environment on the ability of firms to be part of a global value chain (GVC). With the use of a comprehensive firm-level dataset from the World Bank Enterprise Survey—and with a special focus on the countries of the Middle East and North Africa and East Asia and Pacific regions—the contribution of the paper is threefold: First, it provides a range of measures of the characteristics of firms that would identify a firm as likely to be i...
Jul 15, 2024
Yasmine Eissa, Chahir Zaki
On GVC and innovation: the moderating role of policy
This paper empirically investigates the association between global value chains (GVC) participation and countries’ innovation performance. Highlighting the learning effect of foreign knowledge embedded in imported intermediate goods counters the argument that GVC participation is biased towards developed countries with skilled labor abundance. We construct a GVC knowledge spillovers index by merging data on GVC from the EORA26 dataset with R&D of the trade partner. Results show positive as...
Jul 15, 2024
Rym Ayadi, Giorgia Giovannetti, Enrico Marvasi, Chahir Zaki
Trade networks and the productivity of MENA firms in global value chains
Global Value Chain (GVC) participation is typically associated with a productivity premium, yet similar firms can benefit differently depending on the possibility for creating production linkages offered by their countries’ involvement in trade. We show that country-sector intermediate trade network centrality is also positively associated with firms’ productivity, suggesting that the connectivity of the business environment may enhance productivity on top of direct firm-level involvement in...
Jul 5, 2024
Aoife Hanley and Finn Ole Semrau
Exports can speed Europe’s environmental innovation
Europe's Green Deal provides a roadmap for a green economic transition. However, the deal's architects recognise that not all member states are equally capable of bringing their companies up to international best practice. A cornerstone of the Deal is economic and environmental convergence - companies catching up with the latest production techniques, which in turn have a smaller environmental footprint. The ability of businesses to adopt green technologies is a lynchpin of the sustain...
Jul 3, 2024
Xiaolan Fu, David Emes, and Jun Hou
Multinational enterprises and structural transformation in emerging and developing countries: A survey of the literature
This paper presents a review of the literature concerning the relationship between multinational enterprises (MNEs) and structural transformation in emerging and developing countries based on journal publications over the 2000 to 2020 period. Both outward and inward foreign direct investment by multinationals were found to have strong potential implications for structural change, in the form of knowledge transfer and capabilities upgrading, productivity growth, export promotion, industrial diver...
Jul 2, 2024
Luc Fransen and Natalie J. Langford
Building legitimacy in an era of polycentric trade: the case of transnational sustainability governance
Increasing multi‐polarity within global politics is understood to be a key contributor to the current legitimacy crisis facing global governance organisations. International relations scholars studying this crisis recognise that a prominent strategy to confront “Northern” dominance within this arena is through the construction of alternative governance institutions. Yet while the de‐legitimation of long‐established international organisations is widely discussed, there is less focused ...
Jun 20, 2024
Pol Antràs, Evgenii Fadeev, Teresa C. Fort, Felix Tintelnot
Exporting, Global Sourcing, and Multinational Activity: Theory and Evidence from the United States
Multinational firms (MNEs) dominate trade flows, yet their foreign production decisions are often ignored in firm-level studies of exporting and importing. Using newly merged data on US firms' trade and global production, we show that MNEs are more likely to trade with countries that are proximate to their affiliates. We rationalize these patterns with a new source of firm-level scale economies that arises when fixed costs to source from, or sell in, a market are shared across the MNE'...
Jun 11, 2024
Prachi Agarwal, Faizel Ismail, and Vuyiswa Mkhabela
AfCFTA and rules of origin for the textile and apparel industry in Africa
This paper is intended to stimulate a balanced debate on the appropriate rules of origin for the African Continental Free Trade Area (AfCFTA) in the textile and apparel sector. It argues for a ‘developmental regionalism’ approach to the AfCFTA rules of origin that supports a Made in Africa approach that will facilitate the diversification of Africa’s economies towards higher-value production and the creation of regional value chains in the textile and apparel industry. Trade and production...
Jun 11, 2024
Prachi Agarwal, Linda Calabrese, Derrick Abudu, Ogoegbunam Chukwurah
The automotive sector in Nigeria: Opportunities under the AfCFTA
The automotive industry in Nigeria is one of the country's most promising sectors due to its growing domestic market size. The large continental market offered by the African Continental Free Trade Area (AfCFTA) is likely to present an opportunity for the industry.
Jun 7, 2024
Anirudh Shingal, Prachi Agarwal
How did GVC-trade respond to previous healthshocks? Evidence from SARS and MERS
A health crisis can impact GVCs adversely by raising bilateral trade costs and via supply- and demand-sideshocks in the exporting and importing countries.Focusing on trade in select GVC-intensive sectors, we disentangle the effects of these different channels in the context of SARS and MERS in a structural gravity frame-work. The estimated effects are found to be small in magnitude and show significant heterogeneity by sector, channel and disease outbreak. SARS-induced rise in bilateral trade co...
Apr 3, 2024
Antonio Andreoni, Keun Lee & Sofia Torreggiani
Global Value Chains, ‘In-Out-In’ Industrialization, and the Global Patterns of Sectoral Value Addition
Since the emergence and diffusion of regional and global value chains, production-chain development has always played a key role in shaping countries’ structural transformation. Over the years, the geographical breadth, length, and depth of these chains have changed significantly. Building on the catching-up experience of South Korea and China, this chapter investigates the conditions and processes under which today’s catching-up economies can benefit from integrating into global value chain...
Mar 15, 2024
Gideon Ndubuisi and Solomon Owusu
Global Value Chains, Job Creation, and Job Destruction among Firms in South Africa
Extant studies suggest that firms’ engagement in global value chain (GVC) trade is associated with productivity gains that result from the continual reallocation of resources to their most productive use. This reallocation generates benefits for transitioning workers but also incurs costs for workers undergoing turnover. A comprehensive understanding of the overall welfare effect of firms’ engage- ment in GVC trade requires a consideration of the productivity gains and the net job reallocati...
Mar 15, 2024
Caio Torres Mazzi, Gideon Ndubuisi, Elvis Avendo
Learning-by-exporting in South Africa: The influence of global value chain (GVC) participation and technological capability
Using the South African Revenue Service and National Treasury firm-level panel data for 2009–2017, this paper investigates how trade related to the global value chain (GVC) affects the performance of manufacturing firms in South Africa. The paper uses extant classifications of internationally traded products to identify different categories of GVC-related products and compares the productivity premium of international traders for these different categories. Also, the paper investigates possibl...
Mar 15, 2024
Sasidaran Gopalan, Sébastien Miroudot, Ketan Reddy
Global value chains and firm survivability during the COVID-19 pandemic: digitalization as the moderator?
Firms participating in global value chains (GVCs) were not only exposed to significant shocks during the COVID-19 pandemic but also turned out to be more resilient. Leveraging a large cross-country firm-level dataset from the World Bank Enterprise Surveys (WBES) and COVID-19 Follow-Up Enterprise Surveys (CFES), we show that the interaction between digitalization and GVC participation is positively associated with the survival of firms during the pandemic. This empirical result is significant bec...
Mar 15, 2024
Bublu Thakur‑Weigold and Sébastien Miroudot
Supply chain myths in the resilience and deglobalization narrative: consequences for policy
The economic disruptions experienced during the COVID-19 pandemic and Russia’s invasion of Ukraine have generated a narrative of resilience and deglobalization that brings the old world order into question. Heightened public attention on perceived supply chain failures has exerted pressure on governments to intervene in firm-level operations to assure supply of essential or strategic goods. This paper argues that the narrative is founded on false premises. In particular, three supply chain myt...
Mar 15, 2024
Christopher Ksoll, Rocco Macchiavello, Ameet Morjaria
Electoral Violence and Supply Chain Disruptions in Kenya’s Floriculture Industry
Violent conflicts, particularly at election times in Africa, are a common cause of instability and economic disruption. This paper studies how firms react to electoral violence using the case of Kenyan flower exporters during the 2008 postelection violence as an example. The violence induced a large negative supply shock that reduced exports primarily through workers' absence and had heterogeneous effects: larger firms and those with direct contractual relationships in export markets suffer...
Mar 15, 2024
Yuwan Duan, Erik Dietzenbacher, Bart Los, Ruochen Dai
Regional Inequality in China During its Rise as a Giant Exporter: A Value Chain Analysis
China's exports success has implications for regional income inequality, because most of its export products are manufactured in the coastal zone. We propose a value chain–based accounting framework to quantify the contributions of exports to regional income inequality. We employ newly developed interregional input–output tables for China, which distinguish between processing export activities and ordinary export activities. We analyze the period 2002‐2012, the decade during which Chi...
Mar 15, 2024
Pamina Koenig, Sebastian Krautheim, Claudius Löhnert, Thierry Verdier
Local global watchdogs: Trade, sourcing and the internationalization of social activism
International NGO campaigns criticizing firms for infringements along their internationalized value chains are a salient feature of economic globalization. We argue that understanding the international patterns of NGO campaigns requires accounting for the geography of their targets’ economic activities. We propose a model of global sourcing and international trade in which heterogeneous NGOs campaign against heterogeneous firms in response to infringements along their international value chain...
Mar 15, 2024
Pamina Koenig and Sandra Poncet
The effects of the Rana Plaza collapse on the sourcing choices of French importers
This paper analyzes the effects of a major reputational shock affecting textile importers from Bangladesh. The collapse of the Rana Plaza building in April 2013 generated a surge of activism and media coverage specifically targeting the firms that sourced from the factories affected by the disaster. Using monthly firm-level import data from French Customs, we study any potential disruption in these firms’ imports from all origins, and specifically from Bangladesh. We use a difference-in-differ...
Mar 15, 2024
Raphael Kaplinsky and Erika Kraemer-Mbula
Innovation and uneven development: The challenge for low- and middle-income economies
This essay begins with a recounting of the rise of the Mass Production techno-economic paradigm and the emergence of the systemic economic crisis in the early 1970s. It then explains how this crisis was stemmed by the deepening of globalisation, which accelerated during the 1980s. However, shortly before the turn of the millennium, the internal fissures of the paradigm became more apparent, resulting in a renewed slowdown in growth and global financial crises. In the context of these global deve...
Mar 15, 2024
Mauro Boffa, Marion Jansen, Olga Solleder
Participating to Compete: Do Small Firms in Developing Countries Benefit from Global Value Chains?
Standard trade theory suggests that the profile of exporting firms is characterized by large firms which dominate domestic productivity distribution. Large manufacturing multinationals have increased their productivity by participating, creating and shaping global production networks. In recent decades, trade flows have become increasingly dominated by trade-in-tasks within global production networks. Given the importance of pro-competitive effects in establishing the gains from trade follo...
Mar 15, 2024
Leonardo Baccini, Arianna Bondi, Matteo Fiorini, Bernard Hoekman, Carlo Altomonte, Italo Colantone
Global Value Chains and the Design of Trade Agreements
We explore the role of global value chains (GVCs) in the design of preferential trade agreements (PTAs). We propose a theory that focuses on firms involved in backward and forward GVC activities to identify the main actors pushing for deep trade integration. To address the critical issue of endogeneity of trade flows for trade policy, our identification strategy exploits a transportation shock: The sharp increase in the maximum size of container ships, which more than quadrupled between 199...
Mar 15, 2024
Bernard Hoekman and Marco Sanfilippo
Trade and value chain participation: Domestic firms and FDI spillovers in Africa
Data on the location of foreign direct investment (FDI) projects within and across African nations are com- bined with firm-level survey data and information on sectoral input–output relationships to assess what types of FDI are more likely to influence participation in global value chains (GVCs) and to investigate the re- lationship between FDI and the performance of proxi- mate domestic firms. Firm-level analysis finds evidence of vertical spillovers from exposure to FDI, mainly in the manuf...
Mar 15, 2024
Andreas M. Fischer, Philipp Herkenhoff, Philipp Sauré
Identifying Chinese supply shocks: Effects on trade labor markets
An influential literature estimates the impact of trade on labor markets with shift-share instrumental variable designs under the assumption that common demand shocks in advanced economies are negligible. This article documents empirical patterns, which suggest that such common demand shocks are prevalent. It then proposes a strategy that directly identifies country-specific export supply shocks. Finally, it uses these supply shocks in reduced-form regression, which suggest contractions of manuf...
Mar 15, 2024
Philipp Harms, Jaewon Jung, Oliver Lorz
Offshoring and sequential productionchains: A general equilibrium analysis
We present a two-region general equilibrium model in which firms exploit international wage differences by offshoring parts of the production process. Firms have to take into account that production steps follow a strict sequence and that transporting intermediate goods across borders is costly. We analyze how a change in transport costs affects offshoring patterns as well as factor prices, accounting for the general equilibrium effects of firms’ decisions. As we demonstrate, a decline in tran...
Mar 15, 2024
Holger Görg, Anna JAcobs, Saskia Meuchelböck
Who is to suffer? Quantifying the impact of sanctions on German firms
In this paper, we use a novel firm level dataset for Germany to investigate the effect of sanctions on export behaviour and performance of German firms. More specifically, we study the sanctions imposed by the EU against Russia in 2014 in response to the annexation of Crimea and Russia's countermeasures. We find a substantial negative effect on both the extensive and intensive margin of German exports. While the negative effects are strongest for firms exporting products subject to trade re...
Mar 11, 2024
Philipp Herkenhoff, Sebastian Krautheim, Finn Ole Semrau, and Frauke Steglich
Corporate Social Responsibility along the global value chain
Locating substantial parts of the production process in developing and emerging economies, many firms face an increasing demand by stakeholders for Corporate Social Responsibility (CSR) along their value chains. Contractual incompleteness between firms and their suppliers at different stages of production can exacerbate the ability to meet these demands. We analyze a model of sequential production with incomplete contracts where CSR by independent suppliers differentiates the final product in th...
Mar 7, 2024
Haiou Mao, Holger Görg, Guopei Fang
Time to say goodbye? The impact of environmental regulation on foreign divestment
We look at divestments by foreign firms – a topic that has received comparatively little attention in the literature – and investigate how changes in the regulatory environment in the host country may impact on such divestment decisions. We use the implementation of China’s Two Control Zone (TCZ) policy as a “quasi-natural experiment”, using detailed firm level combined with city level data for the empirical analysis. Our results show that the implementation of TCZ policy has led to hi...
Mar 4, 2024
Ben Shepherd
Regional integration and services in African value chains: Retrospect and prospect
This article takes a first step towards understanding the quantitative evidence on the role of services in African value chains. The available data are largely based on assumptions and modelled estimates, but can nonetheless provide some useful information at an aggregate level. In general, services play an important role in the African regional economy, including through their embodiment in the exports of other sectors through input–output relationships. However, services value chains in the ...
Mar 4, 2024
Ben Shepherd
Modelling global value chains: From trade costs to policy impacts
I use an approach from the family of ‘new quantitative trade models’ to explore the links between trade costs and integration in Global Value Chains (GVCs). The model conceptualises GVC trade through a multi-country, multi-sector Ricardian model that nests the standard structural gravity model. It provides a general framework in which to assess the impacts of changes in iceberg trade costs on GVC trade, understood as the sum of backward linkages and pure double counting, in line with recent ...
Feb 12, 2024
Ibrahim Nana, Martin Paul Jr. Tabe-Ojong
Evolution of Global Value Chains Participation and Economic Growth in Africa
Global value chains offer countries unique opportunities to participate in and benefit from international trade by specializing in specific production stages and tasks. The objective of this study is twofold: (i) to investigate the evolution of African countries participation in global value chains and (ii) assess the impact of global value chains participation on growth. The study uses the EORA Multi-Region Input-Output tables to track the evolution of African countries along global va...
Feb 12, 2024
Jann Lay, Tilman Altenburg, Melanie Müller, Tevin Tafese, Rainer Thiele, Frauke Steglich
Europäische Lieferkettenregulierung nicht aufhalten! Sie ist ein wichtiger Schritt für eine bessere Globalisierung
Im Dezember hatten sich die EU-Staaten und das Europäische Parlament auf eine Richtlinie für Lieferketten – die Corporate Sustainability Due Diligence Directive (CSDDD) – geeinigt. Die Zustimmung des Rates am 9. Februar galt als Formsache. Doch nun droht das Veto Deutschlands die Richtlinie auf den letzten Metern zu Fall zu bringen. Eine europäische Lieferkettenregulierung allein kann die Probleme niedriger Löhne, schlechter Arbeitsbedingungen und massiver Umweltschäden in vielen Lä...
Jan 30, 2024
“Sustainable global supply chains in times of geopolitical crises” Annual Report 2023
The overarching topic of this year's report is "The Role of Geopolitics in Global Supply Chains", highlighting ways in which recent geopolitical and geo-economic developments are shaping and influencing current debates and policy processes around global supply chains (GSCs). Following forewords from the network hosts and Dr. Bärbel Kofler (German Ministry for Economic Cooperation and Development), the lead article explores the (re-)configuration of global supply chains in differe...
Jan 18, 2024
Nora Aboushady, Chahir Zaki
Are Global Value Chains for Sale? On Business-State Relations in the MENA Region
We use new data on political connections from the World Bank Enterprise Surveys to examine the impact of connections on firms’ participation in global value chains (GVCs) for six MENA countries (Morocco, Tunisia, Egypt, the West Bank and Gaza, Jordan, and Lebanon). In addition to political connections, we construct several measures of “political influence” based on available data on lobbying and grand corruption. We also explore whether political connections help firms overcome barriers to...
Jan 4, 2024
Johannes Jäger
International Political Economy and Sustainable Finance: Assessing the EU’s Green Deal and UNCTAD’s Green New Deal
Sustainable green finance is often promoted as an innovative tool to deal with environmental problems. This paper assesses policy proposals at the level of the EU and UNCTAD’s Green New Deal, specifically regarding its suggestions in the field of sustainable finance. It provides a theoretical framework in the tradition of critical political economy and combines a global perspective with regulation theory in order to assess different strategies in the area of sustainable finance. The respective...
Nov 21, 2023
Emmanuel B. Mensah, Johannes Van Biesebroeck
Intergration of African countries in regional and global value chains: Static and dynamic patterns
We study the geographic concentration of trade flows of African countries using information on the global input–output structure of trade from the Eora database. Most countries show a similar concentration between close-by versus long-distance trade in their foreign input sourcing as in their export sales. However, changes over the last two decades indicate that many countries increasingly focus their long-distance trade on only one of these two dimensions. This trend is most pronounced in man...
Nov 2, 2023
Vito Amendolagine, Ulrich Elmer Hansen, Rasmus Lema, Roberta Rabellotti, Dalila Ribaudo
Taking advantage of Global Value Chains to spread green energy technologies across countries
Renewable energy technologies, such as wind turbines and solar photovoltaic (PV), are key to achieve a low-carbon transition and make our planet greener (Pegels and Altenburg, 2020). While countries in Europe have previously been the lead markets, the development and diffusion of renewable energy technologies are increasingly taking place on a global scale, including in several latecomer countries (IEA, 2018b; IRENA and ADFD, 2020; UNCTAD, 2023). A recent article featured in World Development (A...
Aug 31, 2023
Laura Mann
The evolution of the global Information Technology Enabled Services (ITES) sector and the shrinking gains of FDI for low- and middle-income economies
The information-technology-enabled services (ITES) sector, or business process outsourcing (BPO) sector, as it is sometimes known, encompasses all services that can be digitized and delivered at a distance, including call centre services, back-office processes, data management, information technologies (IT) development, software support, transcription and engineering services. Some ITES work is relatively low skilled and low value such as outbound call-centre activities, which involves hard-sell...
Apr 28, 2023
Dalia Marin & Caroline Freund
Debate: “Will the COVID-19 pandemic reinforce preexisting trends that in turn lead to reshoring or other forms of GVC restructuring – and what does it imply for policymakers?”
Dalia Marin is Professor of International Economics at TUM School of Management, Technical University of Munich. Before joining TU Munich she was Professor of International Economics at Ludwig-Maximilians University of Munich, Associate Professor at Humboldt University Berlin, and Assistant Professor at the Institute for Advanced Studies, Vienna. Marin is a Senior Research Fellow at BRUEGEL, Brussels, Fellow at the European Economic Association, and Research Fellow at the Centre for Economic Pol...
Apr 28, 2023
David Dollar, Arkebe Oqubay & Christopher Cramer
Debate: “Should governments push for higher domestic value added in export sectors?”
David Dollar is a senior fellow in the John L. Thornton China Center at the Brookings Institution. Before he joined Brookings, David was the U.S. Treasury’s economic and financial emissary to China. He has also worked 20 years for the World Bank, serving among others as country director for China and Mongolia and in the World Bank’s research department. He has written highly influential publications on economic reform, globalization, and economic growth and poverty and is co-editor of the Gl...
Apr 3, 2023
Adriana Erthal Abdenur, Maurício Santoro & Maiara Folly
Chinese Railway Investments in Brazil: Socio-Environmental Implications for the Amazon and Cerrado
As China’s interests and presence in Latin America and the Caribbean (LAC) expand, Chinese firms have been changing their strategy in Brazil. More specifically, they have been diversifying away from buying financial assets toward more greenfield investments, through which China-headquartered companies develop local operations using Brazil-based subsidiaries. Transportation is a key sector for such investments not only due to the vast demand in Brazil, but also because of the accumulated experi...
Jan 30, 2023
Yuwan Duan
Is the Global Value Chain also a Global Pollution Chain?
One of the most well-known theories in international trade and environment is the “Pollution Haven Hypothesis” (PHH). According to the theory, high-income countries with strong environmental regulations will have a comparative disadvantage in pollution-intensive industries, and will tend to offshore their polluting industries to poorer countries. Hence, developing countries will become pollution havens, while the developed ones will specialize in and export clean goods. Whereas several st...
Jan 26, 2023
Aleksandra Kordalska & Magdalena Olczyk
Can Central and Eastern European countries ‘smile’ more? Trade patterns through the lens of value chain functions
A key question in the context of global value chains is: How can countries upgrade their position and focus more on high value-added activities in global value chains (GVCs)? This blog focuses on selected Central and Eastern European (CEE) countries – the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia – and looks at their functional specialization profiles and changes in these profiles, together with crucial factors that could enable them to upgrade their...
Jan 25, 2023
Friendshoring: Rather a myth than reality
Russia's invasion of Ukraine has shown us that the world is in a period of upheaval. Long-standing international laws – like respecting national borders – are being broken. Millions of Ukrainians are fleeing. And as a result of Russia’s aggression, traditional relations are being questioned. Countries are reconsidering with whom and how much trade and interdependence they still want to allow. And a new term is making the rounds: Friendshoring – trading with friends only. What ...
Dec 30, 2022
Sustainable Global Supply Chains Report 2022
Global Supply Chains (GSCs) have become a key feature of globalisation. Production processes are increasingly broken down into specific tasks and organised across national borders. They are organised and governed by “lead firms” that set many of the standards according to which other firms in the chain operate. About half of all global trade is nowadays organised in GSCs. GSCs have manifold effects on economic, social and environmental sustainability. Changes in the configuration of GSCs –...
Nov 28, 2022
Jie Wu and Jacob Wood
How much trade cost will the ongoing US-China trade war generate for global value chains?
The United States (US) and China represent the two largest economies in the World. Since China first entered the World Trade Organization (WTO) in 2001, its bilateral trade with US has grown exponentially, reaching 660 billion US dollars (USD) by the end of 2018 (United States Census Bureau, 2022). Despite the significance of this trade relationship, the nature of the trade activity was much lopsided, with the US incurring a large and ever-increasing trade deficit with China. By 2016, this defic...
Oct 17, 2022
Antonio Andreoni and Simon Roberts
Geopolitics Of Critical Minerals In Renewable Energy Supply Chains
Addressing the climate change crisis calls for an accelerated deployment of renewableenergy technologies – solar panels and wind turbines – as well as a shift towards electric vehicles (EV) (Bainton et al., 2021). The manufacturing of these technologies, however, relies on the availability and supply of different types of critical minerals. Lithium, nickel, cobalt, manganese and graphite are crucial to battery performance, longevity and energy density. Rare earth elements (REEs) are essentia...
Sep 24, 2022
Jan Grumiller, Hannes Grohs, Werner Raza
How to align efficiency, resilience and sustainability in GVCs? A conceptual assessment
The COVID-19 pandemic-induced lockdowns and export restrictions highlighted the vulnerability of global trade and global value chains (GVCs). What is more, many commentators argue that the likelihood of exogenous shocks that threaten international trade and GVCs will increase in the future. This includes natural disasters, pandemics, or political conflicts. The Russian war in Ukraine is the most recent and devastating example. In light of the new global context and due to the experiences during ...
Aug 23, 2022
Laura M.G. Hidalgo, Rosane N. de Faria, Roberta Souza Piao, Christine Wieck
Multiplicity of sustainability standards and potential trade costs in the palm oil industry
The growing impact of the global production of agricultural commodities has created new regulations that aim at a more sustainable trade. Sustainability standards (SS) are essential tools for transnational trade governance because they increase the possibility of recognizing products from sustainable sources. However, there is currently a proliferation of SS in almost every industry. This paper proposes a conceptual framework to establish how standard interactions such as competition, cooperatio...
Jul 4, 2022
Stefan Pahl
Why do countries experience diverging job growth trajectories in GVCs?
Structural change, a process in which resources are shifted from less to more productive sectors, has historically been a driver of economic growth and development. Structural transformation has been particularly successful in Asia, but more recently also in sub-Saharan Africa (Kruse et al., 2021). One important underlying driver of this trend is said to be a country’s participation in global value chains (GVCs) because they are a vehicle for the transfer of technology and facilitate access to...
May 12, 2022
Jörg Hofstetter, Anita McGahan, Brian Silverman, Baniyelme Zoogah
A Unique Diversity: Understanding the sustainability and global integration of African businesses
Diamond rings, chocolate delights, coffee, cars and portable electronics are all integrally grounded in the African continent, however Africa’s vital contributions have not been fully integrated into scholarly understanding of supply or value chains.
May 12, 2022
Joerg S. Hofstetter, Anita M. McGahan, Brian S. Silverman, Baniyelme D. Zoogah
Sustainability and global value chains in Africa: Introduction to the Special Issue
The challenges and opportunities facing African organizations reflect a long history of tensions, tragedies, triumphs, and accomplishments in relationships across continental boundaries. For example, Africa has long been a source of critical minerals and other raw materials that are integral to a wide range of global industries, but scholars of management have not integrated an understanding of Africa's role in global commerce fully in research on international exchange. Perhaps most import...
Mar 25, 2022
Janina Grabs, Federico Cammelli, Sam Levy, and Rachael Garrett
How to find synergies between effectiveness and equity when designing supply chain sustainability policies
Companies with global supply chains are under growing pressure to ensure that their activities and sourcing patterns abroad do not contribute to environmental degradation and human rights abuses. In response, many businesses create supply chain sustainability policies. Such company-internal schemes, such as supplier codes of conduct or internal guidelines, specify companies’ commitments and expected supplier practices. These policies are then passed down through multiple tiers of the supply ch...
Mar 23, 2022
Kailan Tian, Yu Zhang, Yuze Li, Xi Ming, Shangrong Jiang, Hongbo Duan, Cuihong Yang, Shouyang Wang
Regional trade agreement burdens global carbon emissions mitigation
Regional trade agreements (RTAs) have been widely adopted to facilitate international trade and cross-border investment and promote economic development. However, ex ante measurements of the environmental effects of RTAs to date have not been well conducted. Here, we estimate the CO2 emissions burdens of the Regional Comprehensive Economic Partnership (RCEP) after evaluating its economic effects. We find that trade among RCEP member countries will increase significantly and economic output will ...
Mar 7, 2022
Stefano Ponte
Who Gains and who pays the costs of environmental sustainability in global value chains?
The mainstreaming of sustainability management in business is providing new avenues of value creation, capture and (re)distribution, and new opportunities to transfer the costs of environmental compliance along Global Value Chains (GVCs). Suppliers, workers, and farmers – often based in the Global South – create new value through environmental improvements, which are showcased by lead firms to consumers, governments, and the general public. What remains hidden are the additional costs to cre...
Feb 23, 2022
Kristoffer Marslev, Cornelia Staritz, and Gale Raj-Reichert
Rethinking social upgrading in global value chains around worker power
The concept of ‘social upgrading’ has been instrumental in bringing the situation of workers in export sectors across the global South to the fore in research on global value chains (GVCs) and global production networks (GPNs). Responding to accusations of ‘labour-blindness’ (Taylor, 2007), scholars in the field defined social up-grading as the “process of improvement in the rights and entitlements of workers as social actors” (Barrientos et al., 2011, 324). It includes measurable st...
Feb 2, 2022
Kristoffer Marslev,Cornelia Staritz,and Gale Raj-Reichert
Rethinking Social Upgrading in Global Value Chains: Worker Power, State‒Labour Relations and Intersectionality
This article builds on critiques of the concept of social upgrading in global value chain (GVC) research, which problematize its coupling to lead firm strategies and economic upgrading by supplier firms, by reconceptualizing social upgrading through the lens of worker power. It argues that a better understanding of the causal processes of social upgrading can be obtained by integrating insights from labour geography, which situates worker agency at the intersection of a ‘vertical’ dimension ...
Feb 1, 2022
Tilman Altenburg, Nele Wenck, Smeeta Fokeer, and Manuel Albaladejo
Green hydrogen: Opportunities for industrial development through forward linkages from renewables
Green hydrogen will be a key element in any decarbonisation strategy. All major economies are investing heavily in green hydrogen, and often also in international energy partnerships to secure long-term imports. This creates new opportunities for industrial development. Countries which are well-endowed with renewable power sources can induce investments in electrolyser plants and related methanol and ammonia industries, which then offer low cost inputs for energy-intensive industries (steel, alu...
Jan 12, 2022
Philipp Herkenhoff, Sebastian Krautheim, Finn Ole Semrau, and Frauke Steglich
Corporate Social Responsibility along the Global Value Chain
Firms are under increasing pressure to meet stakeholders’ demand for Corporate Social Responsibility (CSR) along their global value chains. We study the incentives for and investments in CSR at different stages of the production process. We analyze a model of sequential production with incomplete contracts where CSR by independent suppliers differentiates the final product in the eyes of caring consumers. The model predicts an increasing CSR profile for suppliers along the value chain: from up...
Jan 1, 2022
Günther Maihold and Fabian Mühlhöfer
Supply Chain Instability Threatens Security of Supplies
The Covid pandemic has severely upset global supply chains. This disruption has now spread to many branches of industry, and consumers are starting to feel the impact. No short-term improvement is in sight, which has serious implications for manufacturing processes all over the world. To begin with, the pandemic primarily affected personal protective equipment; however, the collapse in international trade has also created delivery bottlenecks in other sectors.
Nov 24, 2021
Valentina De Marchi, Matthew Alford
State policies and upgrading in global value chains: A systematic literature review
This paper examines the role of state policymaking in a context of global value chains (GVCs). While the literature acknowledges that states matter in GVCs, there is little understanding of how they matter from a policy perspective. We address this tension between theory and practice by first delineating the state’s facilitator, regulator, producer and buyer roles. We then explore the extent to which corresponding state policies enable or constrain the following policy objectives: GVC particip...
Nov 12, 2021
Peter Kannen, Finn Ole Semrau, Frauke Steglich
Green gifts from abroad? FDI and firms’ green management
Improvements of firms' environmental performance crucially determine the speed of a country's green economic transformation. In this paper, we investigate whether firms with foreign ownership are more likely to adopt 'green' management practices, which determine the capability to monitor and improve a firm's impact on the environment. By using multi-country firm-level data, we show that foreign ownership increases the likelihood of implementing green management practic...
Nov 3, 2021
Ana Margarida Fernandes, Hiau Looi Kee, and Deborah Winkler
What determines countries’ global value chain participation? Three lessons from the past that matter for the future of global value chains
In the early 1990s, Argentina tried to develop a homegrown auto industry, hiding behind an average tariff of more than 13 percent. Over the past two decades, Argentina’s auto exports have stagnated at a dismal 0.2 percent of global auto exports. Around the same period, General Motors (GM) set up GM Poland to import Opel cars for the large Polish domestic market. In 1994, production activities of GM Poland started, and today Poland is one of the world’s major auto exporting countries. S...
Sep 21, 2021
Florian Butollo
No end of globalization: Digital technologies as a source of fragmentation of manufacturing
As the performance of digital devices increases by the minute and new digital base technologies like artificial intelligence (AI) or the internet of things (IoT) proliferate, economic relationships change. This not only accounts for processes within enterprises: the automation of tasks, tools for the integration of work processes, and collaboration through cloud infrastructures will also affect the geographies of production, i.e. the places at which work is performed. In public discourse, one...
Sep 16, 2021
Holger Görg, Jann Lay, Stefan Pahl, Adnan Seric, Frauke Steglich, and Liubov Yaroshenko
Multilateral coordination and exchange for sustainable global value chains
While participation in global value chains (GVCs) is widely associated with benefits for countries’ development and growth, its environmental and social costs become increasingly evident. Representing core buyer and supplier countries in GVCs, the G20 is particularly suited to tackle this global challenge. We recommend the G20 should become a key global forum for exchange and collaboration on this important challenge, setting in place effective processes to ensure multilateral coordination for...
Sep 1, 2021
Julian Donaubauer, Peter Kannen, Frauke Steglich
Foreign Direct Investment & Petty Corruption in Sub-Saharan Africa: An Empirical Analysis at the Local Level
Inspired by a recent and ongoing debate about whether foreign direct investment (FDI) represents a blessing for or an impediment to economic, social, and political development in FDI host countries this paper addresses two issues: Does the presence of foreign investors impact the occurrence of petty corruption? If so, what are the main underlying mechanisms? Geocoding an original firm-level dataset and combining it with georeferenced household survey data, this is a first attempt to analyse whet...
Sep 1, 2021
Janina Grabs, Federico Cammelli, Samuel A. Levy, Rachael D. Garrett
Designing effective and equitable zero-deforestation supply chain policies
In response to the clearing of tropical forests for agricultural expansion, agri-food companies have adopted promises to eliminate deforestation from their supply chains in the form of ‘zero-deforestation commitments’ (ZDCs). While there is growing evidence about the environmental effectiveness of these commitments (i.e., whether they meet their conservation goals), there is little information on how they influence producers’ opportunity to access sustainable markets and related livelihood...
Aug 5, 2021
Matthew Alford, Margareet Visser, Stephanie Barrientos
Southern actors and the governance of labour standards in global production networks: The case of South African fruit and wine
Recent studies highlight the emergence of standards, including multi-stakeholder initiatives developed and applied within the global South where supplier firms are usually based. This trend has created a complex ethical terrain whereby transnational standards flow through global production networks and intersect with domestic initiatives at places of production. The paper complements global production network analysis with the concepts of ‘space of flows’ and ‘space of places’ and insigh...
Jul 16, 2021
Marion Jansen
Four Keys to Resilient Supply Chains
If you work in the field of trade policy, you have likely spent much of the last year responding to the following questions: Where are the masks? Why is there not enough personal protective equipment? Why is vaccine distribution so slow? In short, have we become too reliant on global supply chains? In this context, trust in trade risks becoming a casualty of COVID. This is unfortunate, as trade probably plays an important role in making economies more resilient. In this context and in constan...
Jul 15, 2021
Sophie Hatte, Pamina Koenig
The Geography of NGO Activism against Multinational Corporations
To what extent do Non-Governmental Organizations (NGOs) monitor global value chains? While NGOs regularly denounce the behavior of multinational corporations throughout the world, their motivations for choosing campaign targets remain largely unknown. Using a new dataset on activists’ campaigns toward multinational firms, we estimate a triadic gravity equation for campaigns, involving the NGO, firm, and action countries. Our results point to a strong proximity bias in NGO activity: Distance, n...
Jun 2, 2021
Giovanni Pasquali, Matthew Alford
Global value chains, private governance and multiple end-markets: insights from Kenyan leather
This article analyses how the private governance of global value chains (GVCs) varies across multiple end-markets. This is explored through a two-stage mixed-methods analysis of Kenya’s participation in leather value chains serving Europe, China, India and the COMESA region. We first draw on transaction-level customs data to analyse private governance in terms of the stability of buyer–supplier interactions and presence of intermediaries. We then interrogate these results through supplier in...
May 1, 2021
Andrew Bernard, Emmanuel Dhyne, Glenn Magerman, Kalina Manova, Andreas Moxnes
The Origins of Firm Heterogeneity: A Production Network Approach
This paper explores firm size heterogeneity in production networks. Using all buyer-supplier relationships in Belgium, the paper shows that firms with more customers havehigher total sales but lower sales per customer and lower market shares among thosecustomers. A decomposition of firm sales reveals that downstream factors, especiallythe number of customers, explain the large majority of firm size heterogeneity. Thesefacts motivate a model of heterogeneous firms and network formation where firm...
May 1, 2021
Davin Chor, Kalina Manova, Zhihong Yu
Growing like China: Firm performance and global production line position
Global value chains have fundamentally transformed international trade and development in recent decades. We use matched firm-level customs and manufacturing survey data, together with Input-Output tables for China, to examine how Chinese firms position themselves in global production lines and how this evolves with productivity and performance over the firm lifecycle. We document a sharp rise in the upstreamness of imports, stable positioning of exports, and rapid expansion in production stages...
Apr 22, 2021
Patrizia Casadei and Simona Iammarino
The protectionist threat to global value chains: Evidence from the Brexit shock in the UK textile and apparel industry
The 2016 Brexit referendum and Donald Trump’s election are often associated with the beginning of a new era of economic nationalism and protectionism, which have given rise to the cross-country emergence of discriminatory trade measures harming foreign commercial interests (Evenett, 2019; Gereffi, 2018). Between 2018 and 2019, governments worldwide introduced more than 2,000 contractionary trade policies to strengthen domestic industries at the expense of foreign competitors (Evenett and Frits...
Apr 1, 2021
Lindsay Whitfield and Tilman Altenburg
Automation versus relocation in clothing global value chains: Will investments shift from China to Africa at a big scale?
Since the beginning of this century, China has emerged as the workbench for the world’s clothing industry, increasing its share in global exports from 18% at the turn of the century to about 40% in 2015 (Lu 2016). This had important implications for poor countries, as participation in global clothing value chains historically had been an accelerator of industrialization and poverty reduction (Whitfield, Marslev & Staritz 2021). In the last 50 years, especially a number of Asian countries h...
Mar 8, 2021
Rasmus Lema, Carlo Pietrobelli, Roberta Rabellotti, Antonio Vezzani
Integration in global IT value chains does not necessarily improve innovation capacity
Global Value Chains (GVC) have characterized the evolution of the global economy during the last three decades. Integration in GVC offers remarkable potential for international tasks specialization and for accessing key knowledge and technology. Yet, it is less clear whether and under which circumstances countries and firms are able to acquire innovation capacities. Whether this is possible or not depends on the techno-economic characteristics of the sector considered and on countries’ cont...
Feb 22, 2021
Robert B. Koopman
GVCs and COVID-19: Lessons thus far from trade during a global pandemic
One year into the global COVID-19 pandemic, global trade and global value chains have held up admirably well considering the overall economic impacts in most countries. The COVID-19 pandemic led to shortages of medical equipment and pharmaceutical products in many countries as demand spikes exceeded existing supply and production capacity. Most countries are dependent on imports for critical goods, such as personal protective equipment and various medicines, from a relatively small number of ...
Feb 17, 2021
Alvaro Espitia, Aaditya Mattoo, Nadia Rocha, Michele Ruta, Deborah Winkler
Pandemic trade: COVID‐19, remote work and global value chains
This paper studies the trade effects of COVID-19 using monthly disaggregated trade data for 28 countries and multiple trading partners from the beginning of the pandemic to June 2020. Regression results based on a sector-level gravity model show that the negative trade effects induced by COVID-19 shocks varied widely across sectors. Sectors more amenable to remote work contracted less throughout the pandemic. Importantly, participation in global value chains increased traders’ vulnerability to...
Jan 1, 2021
Emily J. Blanchard, Chad P. Bown, and Robert C. Johnson
Global Value Chains and Trade Policy
How do global value chain (GVC) linkages modify countries’ incentives to imposeimport protection? Are these linkages empirically important determinants of tradepolicy in practice? To address these questions, we develop a new approach to mod-eling tariff setting with GVCs, in which optimal policy depends on the nationality ofvalue-added content embedded in home and foreign final goods. Theory predicts thatdiscretionary tariffs will be decreasing in the domestic content of foreign-p...
Jan 1, 2021
Stefan Pahl, Clara Brandi, Jakob Schwab, Frederik Stender
Cling together, swing together: the contagious effects of COVID‐19 on developing countries through global value chains
This paper aims at estimating the economic vulnerability of developing countries to disruptions in global value chains (GVCs) due to the COVID‐19 pandemic. It uses trade in value added data for a sample of 12 developing countries in sub‐Saharan Africa, Asia and Latin America to assess their dependence on demand and supply from the three main hubs China, Europe, and North America. Using first estimates on COVID‐19‐induced changes in final demand and production, we obtain an early projecti...
Jan 1, 2021
Marcel P. Timmer, Stefan Pahl
Structural Change in Exports: from product to functional specialization
Trade analysis on the basis of countries’ export baskets can be misleading when production is globally fragmented. The chapter argues for a switch to analysis of the type of activities that are embodied in exports. The chapter discusses two steps towards this goal. It first discusses the transition in trade studies from product to vertical specialization. A country’s vertical specialization in trade is measured as the share of domestic value added in its gross exports. The chapter identifi...
Jan 1, 2021
Karishma Banga, Mohamed Gharib, Maximiliano Mendez-Parra, Jamie Macleod
E-commerce in preferential trade agreements: implications for African firms and the AfCFTA
At continent level, the African Continental Free Trade Area (AfCFTA) negotiations are scheduled to include a protocol on e-commerce under Phase III, presenting a unique opportunity for African countries to collectively establish common positions on e-commerce, harmonise digital economy regulations and leverage the benefits of e-commerce. In this paper, we examine developments in e-commerce negotiations, their implications for African businesses and the role of the AfCFTA. This is done using desk...
Jan 1, 2021
Laurie S.M. Reijnders, Marcel P.Timmer, Xianjia Ye
Labour demand in global value chains: Is there a bias against unskilled work?
Rodrik (2018) hypothesizes that technology used in global value chains (GVCs) is biased against the use of unskilled workers. To test this hypothesis, we introduce a GVC production function in which final output is produced by means of factor inputs from all countries that participate in the GVC. In contrast, previous studies only consider one stage of production using inputs from a single country. We derive substitution elasticities and labour demand bias in a system of translog GVC cost equati...
Jan 1, 2021
Karishma Banga
Digital Technologies and Product Upgrading in Global Value Chains: Empirical Evidence from Indian Manufacturing Firms
This paper provides empirical evidence on the impact of digitalisation on product upgrading in Global Value Chains (GVCs). Analysis is done for a sample of Indian manufacturing GVC firms in the period 2001–2015 from the firm-level database Prowess, using the methodology of System Generalised Method of Moments. Product upgrading is captured by a novel sales-weighted average product sophistication indicator constructed at the firm level. Digitalisation is captured through a digital capability in...
Jan 1, 2021
Björn Ambos, Kristin Brandl, Alessandra Perri, Vittoria G. Scalera, Ari Van Assche
The nature of innovation in global value chains
Global value chains (GVCs) have revolutionized production processes and many companies no longer produce goods and services entirely in one single country or within their own organizational boundaries. Through offshoring and outsourcing, value chains are sliced up and activities are dispersed to locations and actors where they can be produced or executed most efficiently. The fine slicing of GVCs also implies that innovation activities can be geographically dispersed and separated from other GVC...
Jan 1, 2021
Ana Margarida Fernandes, Hiau Looi Kee, Deborah Winkler
Determinants of Global Value Chain Participation: Cross-Country Evidence
The past decades have witnessed big changes in international trade with the rise of global value chains (GVCs). Some countries, such as China, Poland, and Vietnam rode the tide, while other countries, many in the Africa region, faltered. This paper studies the determinants of countries’ GVC participation, based on a panel database of more than 100 countries from 1990 to 2015. Results from a three-pronged empirical approach show that factor endowments, geography, political stability, liberal tr...
Jan 1, 2021
Eddy Bekkers, Robert B. Koopman, Carolina Lemos Rêgo
Structural change in the Chinese economy and changing trade relations with the world
This paper examines the impact of structural change in China, in particular a reduction in the savings rate, an increase in the share of skilled workers, and an increase in productivity in technologically advanced manufacturing sectors targeted by Made in China 2025. Baseline projections until 2040 are generated with the WTO Global Trade Model, a dynamic computable general equilibrium model. With the modelled structural changes, the Chinese economy is projected to reorient its focus increasingly...
Jan 1, 2021
Laura Boudreau, Julia Cajal-Grossi, and Rocco Macchiavello
Global Value Chains in Developing Countries: A Relational Perspective from Coffee and Garments
There is a consensus that global value chains have aided developing countries' growth. This essay highlights the governance complexities arising from participating in such chains, drawing from lessons we have learned conducting research in the coffee and garment supply chains. Market power of international buyers can lead to inefficiently low wages, prices, quality standards, and poor working conditions. At the same time, some degree of market power might be needed to sustain long-term supp...
Jan 1, 2021
Wen Chen, Bart Los, Marcel Timmer
Factor incomes in global value chains: The role of intangibles.
Recent studies document a decline in the share of labour and a simultaneous increase in the share of residual (‘factorless’) income in national GDP. We argue the need for study of factor incomes in cross-border production to complement country studies. We define a GVC production function that tracks the value added in each stage of production in any country-industry. We define a new residual as the difference between the value of the final good and the payments to all tangibles (capital and ...
Jan 1, 2021
Gideon Ndubuisi, Solomon Owusu
How important is GVC Participation to Export Upgrading
Abstract Exporting higher‐quality and complex products are deemed pathways to economic growth and development. However, producing such products are knowledge‐intensive and require quality intermediate inputs and advanced technologies. Integration into global trade networks is increasingly argued to be amongst the pathways to obtain such inputs and technologies, although not all countries may benefit equally from such integration. This paper builds on these arguments and investigates how par...
Jan 1, 2021
Julia Cajal-Grossi, Rocco Macchiavello, and Guillermo Noguera
Buyers’ Sourcing Strategies and Suppliers’ Markups in Bangladeshi Garments
Do suppliers' margins in global value chains depend on buyers' approach to sourcing? We distinguish between international buyers adopting relational versus spot sourcing strategies in the Bangladeshi garment sector. Our data allow us to match inputs used by exporters to produce specific orders for different buyers. Within suppliers, we show that orders produced for relational buyers earn higher prices than comparable orders produced for spot buyers. These orders however do not differ i...
Jan 1, 2021
Anne Mette Kjær, Ole Therkildsen, Lars Buur, and Michael Wendelboe Hansen
When ‘Pockets of effectiveness’ matter politically: Extractive industry regulation and taxation in Uganda and Tanzania
It is a common view that states in the developing world with substantial extractive natural resource discoveries may not have the capacity to tax and regulate multinational companies in the sector. In this article, we show that ruling elites in recently resource-rich Tanzania, and in Uganda – expected to become resource-rich in the foreseeable future - have learned from the resource curse: they seek to construct ‘pockets of effectiveness’ (POEs) to regulate and tax natural resources. We ex...
Jan 1, 2021
Carolin Brix‐Asala, Stefan Seuring, Philipp C. Sauer, Axel Zehendner, Lara Schilling
Resolving the base of the pyramid inclusion paradox through supplier development
Resulting from divergent business environments between actors, the integration of the base of the pyramid (BoP) into formal supply chain (SC) structures is often ham- pered by institutional voids, which can result in the emergence of paradoxical situa- tions. This paper analyzes the potential of supplier development (SD) for addressing the BoP inclusion paradox. The study develops a framework based on the assumption that SD enables the development of capabilities and supplier performance, which ...
Jan 1, 2021
Justin Barnes, Anthony Black, Lorenza Monaco
Government Policy in Multinational-Dominated Global Value Chains: Structural Transformation within the South African Automotive Industry
Through a series of government plans, the South African automotive industry has achieved undeniable success, especially in terms of its export orientation. The industry uses efficient technologies and is integrated into global markets. However, major structural weaknesses exist. Export growth has not been accompanied by increasing local content, investment has been modest and employment creation insignificant. Vehicle and component imports into the domestic market are high and the industry runs ...
Jan 1, 2021
Mike Morris, Justin Barnes, David Kaplan
Value chains and Industrial Development in South Africa
This chapter focuses on the dynamics of global value chains (GVC) engagement and industrial development in South Africa through two case studies—the automotive and textiles/apparel sectors. The further industrialization and development of South Africa and of the Southern African region will depend heavily on further developing their engagement in GVCs and simultaneously upgrading their capacities into higher valued and more skill and intensive activities. The automotive industry is import and ...
Jan 1, 2021
Justin Barnes, Anthony Black, Chelsea Markowitz, and Lorenza Monaco
Regional integration, regional value chains and the automotive industry in Sub-Saharan Africa
To date, regional automotive value chains have not developed to any significant extent in Africa. Growing demand for vehicles across the continent, closer economic integration and the desire on the part of some larger African countries to establish an automotive industry have improved prospects. But major obstacles remain: the political geography of the subcontinent and the tendency of the industry to cluster in a few locations indicate that many smaller countries are likely to miss out on attra...
Jan 1, 2021
Antonio Andreoni, Pamela Mondliwa, Simon Roberts, and Fiona Tregenna
Structural Transformation in South Africa The Challenges of Inclusive Industrial Development in a Middle-Income Country
Taking South Africa as an important case study of the challenges of structural transformation, Structural Transformation in South Africa offers a new micro-meso level framework and evidence linking country-specific and global dynamics of change, with a focus on the current challenges and opportunities faced by middle-income countries. Detailed analyses of industry groupings and interests in South Africa reveal the complex set of interlocking country-specific factors which have hampered structura...
Jan 1, 2020
Krishnan, A, Banga, K and Mendez-Parra, M
Disruptive technologies in agricultural value chains: Insights from East Africa
Global food demand is expected to increase by somewhere between 59% and 98% by 2050 as the world population reaches an estimated 9.7 billion. Food production is especially critical in Africa, where over 70% of the population rely on agriculture for their livelihoods. Against a backdrop of the rapid dwindling of agricultural productivity, the exclusion of women from the work force and the threat of climate change, an increase in the use of agricultural technologies – AgriTech – could help re...
Jan 1, 2020
Gary Gereffi
What does the COVID-19 pandemic teach us about global value chains? The case of medical supplies
The COVID-19 pandemic has caused a dramatic shortage in the medical supplies needed to treat the virus due to a massive surge in demand as the disease circled the globe during the first half of 2020. Prior to the crisis, there was an interdependence of trade and production for medical supplies, with advanced industrial countries like the United States and Germany specializing in the relatively high-tech medical devices sector, while low-cost production hubs such as China and Malaysia were leadin...
Jan 1, 2020
Jann Lay, Tevin Tafese
Promoting private investment to create jobs: A review of the evidence
The promotion of private investment, in particular in the form of Foreign Direct Investment (FDI), has been a key component of economic development strategies since the early 1990s. Recent development policy initiatives, for example the G20 Compact with Africa (CwA) but also Germany's "Marshall Plan with Africa", put re-renewed emphasis on mobilizing foreign private capital for accelerated economic growth and, most importantly, the creation of productive employment at scale. This ...
Jan 1, 2020
Johan A. Oldekop, Giovanni Pasquali, Uma Kothari, Aarti Krishnan, Tom Lavers, Aminu Mamman, Diana Mitlin, Negar Monazam Tabrizi, Tanja R. Müller, Khalid Nadvi, Rose Pritchard, Nicholas Jepson, Kate Pruce, Chris Rees, Jaco Renken, Antonio Savoia, Seth Schindler, Annika Surmeier, Gindo Tampubolon, Matthew Tyce, Vidhya Unnikrishnan, Ambarish Karamchedu, Martin Hess, Rory Horner, Upasak Das, David Hulme, Roshan Adhikari, Bina Agarwal, Matthew Alford, Oliver Bakewell, Nicola Banks, Stephanie Barrientos, Tanja Bastia, Anthony J. Bebbington, Ralitza Dimova, Sam Hickey, Richard Duncombe, Charis Enns, David Fielding, Christopher Foster, Timothy Foster, Tomas Frederiksen, Ping Gao, Tom Gillespie, Richard Heeks, Yin-Fang Zhang
COVID-19 and the case for global development
COVID-19 accentuates the case for a global, rather than an international, development paradigm. The novel disease is a prime example of a development challenge for all countries, through the failure of public health as a global public good. The COVID-19 pandemic has highlighted the falsity of any assumption that the global North has all the expertise and solutions to tackle global challenges, and has further highlighted the need for multi-directional learning and transformation in all countries ...
Jan 1, 2020
Anna Pegels and Tilman Altenburg
Latecomer development in a “greening” world: Introduction to the Special Issue
The current transgression of ecological boundaries requires a transformation to a ‘Green Economy’, with rigorous and fast reductions of pollution and resource consumption. Transformative policy reforms towards this aim can lead to economic co-benefits, but they can also be costly, at least for certain economic actors. Furthermore, they can involve trade-offs between current and future wellbeing. Timing and sequencing of reforms is thus far from trivial. More research is needed to inform p...
Jan 1, 2020
Philip Sauré, Philipp Herkenhoff
How Expected Inflation Distorts the Current Account and the Valuation Effect
We show that the current account balance (CA) is systematically distorted by an inflation effect, which arises because income on foreignissued debt is recorded as nominal interest in the currency of denomination. Since nominal interest includes compensations for expected inflation, increases in the latter must impact the CA. Guided by the relevant international accounting rules, we impute the inflation effect for 50 economies between 1991 and 2017. When adjusting for the inflation effect, the ab...
Jan 1, 2020
Lindsay Whitfield, Cornelia Staritz
Local supplier firms in Madagascar’s apparel export industry: Upgrading paths, transnational social relations and regional production networks
This article asks whether and how local firms in low-income countries can participate, upgrade and capture value in apparel global value chains in the context of increased entry barriers and asymmetric power relations. It focuses on Madagascar, which is the top apparel exporter in Sub-Saharan Africa and one where there is a significant number of local firms. The article examines the capability-building processes of local firms, which are the basis for upgrading paths and broader sector developme...
Jan 1, 2020
Lindsay Whitfield, Cornelia Staritz, Mike Morris
Global Value Chains, Industrial Policy and Economic Upgrading in Ethiopia’s Apparel Sector
This article examines whether low‐income countries can still benefit from participating in manufacturing global value chains (GVCs) in terms of broader industrial development in a global context of greater competition and higher requirements. It contends that developing internationally competitive local firms and domestic linkages, in addition to upgrading, is crucial for participation in GVCs to drive industrialization. The study focuses on Ethiopia's recent experience with developing an...
Jan 1, 2020
Heiwai Tang, Fei Wang, Zhi Wang
Domestic segment of global value chains in China under state capitalism
This paper studies the relationship between the changing domestic segment of global value chains and the return of state capitalism in China. To this end, we propose a method to estimate an extended input-output (IO) table that tracks inter-sector transactions between different types of firms in a domestic economy. The method is an application of constrained optimization, which relies on basic information from a country's national IO table, as well as sector- and firm-level data. We also pr...
Jan 1, 2020
Xiaolan Fu
Digital Transformation of Global Value Chains and Sustainable Post-Pandemic Recovery
This perspective paper examines the impact of the COVID-19 pandemic on global production and trade from the perspective of global value chains. Particular attention is paid to the transmission mechanisms and the role of digital technology in sustainable post-pandemic economic recovery. It argues that emerging technologies will be a driver of the global economic recovery, while the challenge to sustainable and inclusive global development will be significant, especially with regard to inequality ...
Jan 1, 2020
Erik Churchill, José-Antonio Monteiro, Victor Stolzenburg & Deborah Winkler
Women and Trade: The role of trade in promoting gender equality
In view of the complexity of the relationship between trade and gender, it is important to assess the potential impact of trade policy on both women and men and to develop appropriate policies to ensure that trade contributes to enhancing opportunities for all. Building on new analysis and data broken down by gender, “Women and Trade: The role of trade in promoting gender equality” aims to advance understanding of the relationship between trade and gender equality and to identify opportuniti...
Jan 1, 2020
Christina Saulich
Accessing Global Value Chains: The Politics of Promoting Export-Driven Industrialisation and Upgrading in the Mozambican Cashew Processing Industry
This working paper focuses on the question: How does politics shape the promotion of export-driven industrialisation and firm-level upgrading in Sub-Saharan Africa? It exemplifies this question with an in-depth, qualitative study of the cashew processing industry in Mozambique in the period from 1991 until 2019. The paper links the political settlements framework, global value chain (GVC) analysis and the research on technological capabilities to explore why the Mozambican Government support...
Jan 1, 2020
Julian Glitsch, Olivier Godart, Holger Görg, Saskia Mösle, Frauke Steglich
Lagging behind? German Foreign Direct Investment in Africa
German Foreign Direct Investment (FDI) in Africa is lagging behind China, France, the Netherlands, the UK, the US, and other economies. It represented only 1 percent of the German total FDI stock abroad in 2018 and is concentrated in few African countries. Overall, around 850 German firms have roughly 200,000 employees on the African continent (as of 2017). Compared with the main sending countries, German FDI is more concentrated in manufacturing as oppos...
Jan 1, 2020
Clara Brandi, Jakob Schwab, Axel Berger, Jean-Frédéric Morin
Do environmental provisions in trade agreements make exports from developing countries greener?
Environmental provisions in preferential trade agreements (PTAs) are increasing in terms of their number and variety. The economic effects of these environmental provisions remain largely unclear. It is, therefore, necessary to determine whether the trend to incorporate environmental provisions in PTAs counteracts the goal to spur economic development through trade via these PTAs. This is the first article in which the trade effects of environmental provisions in PTAs are thoroughly investigated...
Jan 1, 2020
Aslihan Arslan, David E. Tschirley, Eva-Maria Egger
Rural Youth Welfare along the Rural-urban Gradient: An Empirical Analysis across the Developing World
We use survey data on 170,000 households from Asia, Latin America and Africa, global geo-spatial data, and an economic geography framework to highlight five findings about rural youth in developing countries. First, the youth share in population is falling rapidly, and youth numbers are stable or falling slowly everywhere, except in Africa. In Africa, youth share is rising very slowly, but numbers are set to double in 40 years. Second, large majorities of rural youth live in spaces that are not ...
Jan 1, 2020
Christopher Findlay, Bernard Hoekman
Value chain approaches to reducing policy spillovers on international business
Government policy can add to the costs of doing international business. It can distort the construction of and raise the costs of operation of global value chains (GVCs), to the detriment of the participating economies. Given rising technological and market-driven headwinds confronting GVCs, countries seeking to attract GVC activities have greater incentives to identify and address policies that negatively affect international business investment. Cooperation of businesses with regulators, analy...
Jan 1, 2020
Sandra Cabrera de Leicht, Matteo Fiorini, Clara Brandi, Philip Schleifer, Katharina Bissinger, Niematallah Elfatih Ahmed Elamin, and Santiago Fernandez de Cordova
Linking Voluntary Standards to Sustainable Development Goals
With the 2030 Agenda for Sustainable Development, the United Nations has called on the private sector to contribute more to achieving the Sustainable Development Goals (SDGs). This report helps decision makers in the public and private sectors to understand where voluntary sustainability standards are best placed to contribute. It maps the linkages between these standards and each SDG goal, including its specific targets.
Jan 1, 2020
Bernard Hoekman
Global Value Chains: Inter-Industry Linkages, Trade Costs and Policies
Jan 1, 2020
Rocco Macchiavello, Ameet Morjaria
Competition and Relational Contracts in the Rwanda Coffee Chain
How does competition affect market outcomes when formal contracts are not enforceable and parties’ resort to relational contracts? Difficulties with measuring relational contracts and dealing with the endogeneity of competition have frustrated attempts to answer this question. We make progress by studying relational contracts between upstream farmers and downstream mills in Rwanda’s coffee industry. First, we identify salient dimensions of their relational contracts and measure them through ...
Jan 1, 2020
Saskia Mösle, Frauke Steglich
Policy instruments for FDI promotion in Africa
Global foreign direct investment (FDI) has increased substantially over the past decades and so has FDI in Africa. However, still only 3 percent of global FDI stocks and 1 percent of German FDI is located in Africa. There are several policy instruments that can contribute to higher investment in developing countries. The Policy Brief outlines several important investment promotion instruments of both sender and recipient countries of FDI and assesses their impact.
Jan 1, 2020
Lindsay Whitfield, Cornelia Staritz
The Learning Trap in Late Industrialisation: Local Firms and Capability Building in Ethiopia’s Apparel Export Industry
Local firms in new supplier countries face major challenges in entering manufacturing global value chains (GVCs) in the context of increased competition and requirements. To understand these challenges, we argue for the importance of looking more closely at local firm capability building, which is a costly and uncertain process and in the early stage of industrialisation was historically facilitated by industrial policy and leveraging foreign knowledge. This article examines the opportunities an...
Jan 1, 2020
Caio Torres Mazzi, Gideon Ndubuisi, and Elvis Korku Avenyo
Exporters and global value chain participation: Firm-level evidence from South Africa
Using the South African Revenue Service and National Treasury firm-level panel data for 2009-17, this paper investigates how global value chain-related trade affects the export performance of manufacturing firms in South Africa. In particular, the paper uses extant classifications of internationally traded products to identify different categories of global value chain-related products and compares the productivity premium of international traders for these different categories. Also, the paper ...
Jan 1, 2020
Sébastien Miroudot, Håkan Nordström
Made in the World? Global Value Chains in the Midst of Rising Protectionism
In the last decade, the concept of ‘global value chain’ (GVC) has become popular to describe the way firms fragment production into different stages that are located in different economies. However, recent evidence indicates that there are lower levels of fragmentation of production. Some authors also suggest that supply chains are regional rather than global. We offer a comprehensive review of the evidence based on the 2018 update of the OECD trade in value added database. The ‘made in th...
Jan 1, 2020
Reena Das Nair and Shingie Chisoro
Confronting entry barriers in South Africa’s grocery retail sector
Extensive urbanisation along with the associated demand for increased convenience has spurred the demand for fresh food, processed food and household products sold through supermarket chains. From a consumer perspective, supermarkets offer a convenient ‘one-stop-shopping’ experience that can greatly reduce the overall cost of acquiring a typical basket of products due to cost savings derived from economies of scale and scope, among other benefits (Humphrey, 2007; OECD, 2015; Tschirley, 201...
Jan 1, 2020
Nicole Helmerich, Gale Raj-Reichert, Sabrina Zajak
Exercising associational and networked power through the use of digital technology by workers in global value chains
While there are heated debates about how digitalization affects production, management and consumption in the context of global value chains, less attention is paid to how workers use digital technologies to organize and formulate demands and hence exercise power. This paper explores how workers in supplier factories in global value chains use different digital tools to exercise and enhance their power resources to improve working conditions. Combining the global value chain framework and concep...
Jan 1, 2020
Reena Das Nair and Namhla Landani
The role of supermarket chains in developing food, other fast-moving consumer goods and consumer goods suppliers in regional markets
Supermarkets are strong catalysts to stimulate the growth and development of producers and suppliers of processed food and manufactured products in Southern Africa. This paper assesses the role of supermarkets and governments in developing supplier capabilities through supplier development programmes. In South Africa, a shift is evident in recent approaches by supermarkets away from mere compliance as part of black economic empowerment or social responsibility objectives, to more mutually benefi...
Jan 1, 2020
Jedrzej George Frynas, Lars Buur
The presource curse in Africa: Economic and political effects of anticipating natural resource revenues
The notion of the ‘resource curse’ suggests that large inflows of extractive industry revenues cause many adverse macro-economic and political effects. The resource curse literature focuses on the impact of actual inflows of extractive resource revenues. However, anticipation of future resource revenues can also lead to negative macro-economic and political effects even before resource extraction takes place, which points to the role of behavioral aspects of the ‘resource curse’. Using e...
Jan 1, 2020
Mark Alan Heuer, Usman Khalid, Stefan Seuring
Bottoms up: Delivering sustainable value in the base of the pyramid
Despite a wealth of expertise involving leading institutions over at least 15 years, a base of the pyramid (BoP) model resulting in scalability has yet to emerge. We posit that institutional gaps between BoP goals of developing human and social capital on one hand and a short-term profit focus of business on the other contribute to the lack of scalability. We address this gap by proposing a social intermediary to link the BoP with firms involved in the BoP. The social intermediary will coordinat...
Jan 1, 2020
Keun Lee, Franco Malerba, Annalisa Primi
The fourth industrial revolution, changing global value chains and industrial upgrading in emerging economies
The 4IR can open windows of opportunity for emerging economies but also raises red flags in terms of the main challenges that these changes pose to firms, industrial systems and policy approaches. Benefiting from it will not be automatic, as these economies suffer from several gaps that hamper their possibility to operate in a digital industrial landscape. However, with a capable entrepreneurial state, developing economies could use the ongoing uncertain and fast-changing scenario to fast track ...
Jan 1, 2020
Reena Das Nair and Namhla Landani
New approaches to supermarket supplier development programmes in Southern Africa
Supermarkets are strong catalysts to stimulate the growth and development of suppliers of processed food and manufactured products in Southern Africa. This paper assesses the role of supermarkets and governments in developing supplier capabilities through supplier development programmes. In South Africa, a shift is evident in supplier development programmes by supermarkets away from mere compliance as part of black economic empowerment or social responsibility objectives, to more mutually benefi...
Jan 1, 2020
Robert Koopman, John Hancock, Roberta Piermartini, Eddy Bekkers
The Value of the WTO
Recent developments in global trade include actions by major global traders that lie outside the norms of behaviour of the World Trade Organization (WTO) over the last 20 years. Member frustrations with the slow pace of negotiations and concerns about strategies and behaviours of other members approaches to trade and economic development have created unprecedented stresses on a system of rules and commitments that have long encouraged global trade growth and increased economic integration. In th...
Jan 1, 2020
Annalisa Primi, Manuel Toselli
A global perspective on industry 4.0 and development: new gaps or opportunities to leapfrog?
This paper contributes to the debate on digitalisation and development focusing on industrial organisation and production processes. It analyses the evolution of the global development landscape since the 1990s and provides a taxonomy of channels through which Industry 4.0 is redefining the patterns of value creation and appropriation. It clarifies the impacts of these changes on developing economies and presents policy options to avoid that Industry 4.0 becomes another and even greater source o...
Jan 1, 2020
Fabio Landini, Rasmus Lema, Franco Malerba
Demand-led catch-up: a history-friendly model of latecomer development in the global green economy
This article examines the role played by demand in catching up and in leadership changes in green industries, motivated by the belief that demand-led catch-up is a prevalent pathway in such industries. The article first examines stylized cases of sectoral green catch-up by China in which the local market and domestic demand played an important role before the sector started expanding globally. In particular, the focus is on three industries: wind, biomass and hydropower. Then, it uses a history-...
Jan 1, 2020
Wei Tian, Miaojie Yu
Distribution, outward FDI, and productivity heterogeneity: China and cross-countries’ evidence
This paper examines distribution-oriented outward FDI using Chinese multinational firm–level data. Distribution outward FDI refers to Chinese parent firms in manufacturing that penetrate foreign markets through wholesale trade affiliates that resell exportable goods. Our estimations correct for rare-events bias and show that distribution FDI are more productive than non-FDI firms but less productive than non-distribution FDI firms. As cross-border communications costs (transportation costs) in...
Jan 1, 2020
Sébastien Miroudot
Reshaping the policy debate on the implications of COVID-19 for global supply chains
Disruptions in global supply chains in the context of the COVID-19 pandemic have re-opened the debate on the vulnerabilities associated with production in complex international production networks. To build resilience in supply chains, several authors suggest making them shorter, more domestic, and more diversified. This paper argues that before redesigning global supply chains, one needs to identify the concrete issues faced by firms during the crisis and the policies that can solve them. It hi...
Jan 1, 2020
Bart Los, Marcel Timmer
Measuring bilateral exports of value added: a unified framework.
We provide a unified framework for measuring bilateral exports of value added. We outline a general methodology that encompasses the measures introduced by Johnson and Noguera (2012) (value added consumed abroad) and Los et al. (2016) (value added in exports), to which we refer as VAX-C and VAX-D, respectively. In addition we suggest a novel third measure, VAX-P, which indicates the value added used abroad in the final stage of production. We show that they can all be derived with the method of...
Jan 1, 2020
Gideon Ndubuisi, Emmanuel Mensah and Solomon Owusu
Export Variety and Imported Intermediate Inputs: Industry-Level Evidence from Africa
Imported intermediate inputs offer access to lower-priced, higher quality, and a wider variety of inputs that can increase the possibility of producing and selling more diversified products in foreign markets. In this paper, we examine this relationship using a novel manufacturing industry-level data across 26 African countries over the 1995-2016 period. We find strong evidence of a positive relationship between imported intermediate inputs and the variety of exported products. Further analyses ...
Jan 1, 2020
Reena Das Nair and Namhla Landani
Making agricultural value chains more inclusive through technology and innovation
Some entry barriers in agricultural and agro-processing value chains, particularly for smallholder farmers and small/medium-sized processors, can be overcome with innovation and technology adoption. Technologies and innovation in these sectors have been both radical and incremental, ranging widely through biotechnology; production technologies; automation in sorting, grading, and packaging; and digital platforms and data-connected devices for market access. These technologies have enabled farmer...
Jan 1, 2020
Neil M. Coe
Logistical geographies
Although logistics are fundamentally geographical and of critical importance to contemporary society, it is only relatively recently that human geographers and cognate social scientists have started to meaningfully engage with the topic. This paper explores this recent growth of interest, which encompasses the work of transport geographers, economic geographers, labour geographers, mobilities scholars and critical logistics scholars. It synthesises, reviews and evaluates this research around fou...
Jan 1, 2020
Jo van Biesebroeck, Alexander Schmitt
Testing Predictions on Supplier Governance from the Global Value Chains Literature
A vast empirical literature analyzes the determinants of the make-or-buy decision, but firms also need to decide how to organize their supplier relationships when they choose to buy. The global value chains framework provides predictions on the nature of buyer-supplier collaboration. We use a unique transaction-level dataset of outsourced automotive components to study carmakers’ choice between four distinct types of supplier governance: market, captive, relational, or modular. The theory form...
Jan 1, 2020
Adnan Seric, Holger Görg, Wan-Hsin Liu and Michael Windisch
Risk, resilience and recalibration in global value chains
Current global value chains are highly efficient, specialized and interconnected, but also highly vulnerable to global risks. The COVID-19 pandemic has been a stark demonstration of this point, causing supply-side disruptions in the first quarter of 2020, as China and other Asian economies were hit by the outbreak of the virus which eventually spread globally, leading to business closures around the world. The ensuing supply chain breakdown prompted policymakers in many countries to address the ...
Jan 1, 2020
Bethelhem Legesse Debela, Esther Gehrke, Matin Qaim
Links between Maternal Employment and Child Nutrition in Rural Tanzania
Improving child nutrition and empowering women are two important and closely connected development goals. Fostering female employment is often seen as an avenue to serve both these goals, especially if it helps to empower the mothers of undernourished children. However, maternal employment can influence child nutrition through different mechanisms, and the net effect may not necessarily be positive. We develop a theoretical model to show that maternal employment can affect child nutrition throug...
Jan 1, 2020
Lindsay Whitfield, Cornelia Staritz, Ayelech T. Melese, Sameer Azizi
Technological Capabilities, Upgrading, and Value Capture in Global Value Chains: Local Apparel and Floriculture Firms in Sub-Saharan Africa
Many local firms in sub-Saharan African countries are failing to enter and upgrade in new manufacturing and agribusiness export sectors. This article argues that we need to look more closely at the costly, risky, and uncertain firm-level processes of building capabilities in order to understand this challenge. However, local firm agency is constrained and has to be situated in asymmetric structures that are determined by transnational interfirm relations in global value chains (GVCs) as well as ...
Jan 1, 2020
Anthony Goerzen, Simon Peter Iskander, Joerg Hofstetter
The effect of institutional pressures on business-led interventions to improve social compliance among emerging market suppliers in global value chains
Emerging market governments are incented to attract global value chain (GVC) activities to fuel economic growth. At the same time, in light of real and perceived workplace-related injustices within emerging markets, GVC lead firms are under pressure to improve social standard compliance within their upstream supply chain. Among the most common approaches to achieve these outcomes is to impose standards of conduct that are vetted by on-site audits. Research has shown, however, that improvement in...
Jan 1, 2020
Justine Falciola, Marion Jansen, Valentina Rollo
Defining firm competitiveness: A multidimensional framework
Defining and measuring competitiveness remains a subject of interest as well as debate: policy makers need to understand how competitive their country is relative to others, and how their competitive position evolves overtime (Fagerberg & Srholec, 2017). As such, well-known indicators of country performance have been developed over the years. While the business and economic literature recognise that “It is the firms, not nations, which compete in international markets” (Porter, 1998), th...
Jan 1, 2020
Yuan Zi
Trade costs, global value chains and economic development
This paper develops a model to study the impact of trade costs on developing countries’ industrialization when sequential production is networked in global value chains (GVCs). In a two-country setting, a decrease in trade costs of intermediates is associated with South joining and moving up the value chain and both North and South experiencing a welfare improvement. The wage gap between North and South first increases and then decreases. Extending the model to a multi-country setting, I show ...
Jan 1, 2020
Lars Buur, Rasmus H. Pedersen, Malin J. Nystrand, José J. Macuane, and Thabit Jacob
The politics of natural resource investments and rights in Africa: A theoretical approach
Over the past decade and a half, large-scale investments in natural resources in African countries have increased dramatically. While investments in natural resources and agriculture have become more important for African economies, since they have stimulated economic growth and made regimes dependent on rents and revenues for their own survival, surprisingly many investments fail to be implemented or fall through during implementation. Furthermore, natural resource investments often end up viol...
Jan 1, 2020
Reena Das Nair
The “supermarket revolution” in the South
This chapter evaluates the extent of 'supermarketisation' and internationalisation of supermarket chains and the implications on consumers, suppliers and the competitive landscape. While the degree of both supermarketisation and internationalisation has not been to the extent that was predicted in the early 2000s, there are nonetheless important implications of the conduct of large supermarket chains with market power and their positions as lead firms that shape supplier development in...
Jan 1, 2020
Ha‐Joon Chang, Antonio Andreoni
Industrial Policy in the 21st Century
Industrial policy is back at the centre stage of policy debate, while the world is undergoing dramatic transformations. This article contributes to the debate by developing a new theory of industrial policy, incorporating some issues that have been neglected so far and taking into account the recent changes in economic reality. The authors explore how the incorporation of some of the neglected issues — commitments under uncertainty, learning in production, macroeconomic management (especially ...
Jan 1, 2020
Rocco Macchiavello and Ameet Morjaria
Competition and Relational Contracts in the Rwanda Coffee Chain
How does competition affect market outcomes when formal contracts are not enforceable and parties resort to relational contracts? Difficulties with measuring relational contracts and dealing with the endogeneity of competition have frustrated attempts to answer this question. We make progress by studying relational contracts between upstream farmers and downstream mills in Rwanda’s coffee industry. First, we identify salient dimensions of their relational contracts and measure them through an ...
Jan 1, 2020
Stamm, Andreas, Luise Dietrich, Heike Harling, Laura Häußler, Florian Münch, Jana Preiß, Jan Siebert
Sustainable public procurement as a tool to foster sustainable development in Costa Rica: challenges and recommendations for policy implementation
In 2015, Costa Rica was the first country in Latin America to approve a National Policy for Sustainable Public Procurement (SPP). In 2018, a research team from DIE studied the efforts to make SPP a reality in Costa Rica and developed policy conclusions, partly drawing on international experience. The challenges to a swift implementation of SPP in Costa Rica are manifold: The fragmented governance in public administration impedes joint efforts and coordinated action among institutions of the c...
Mar 4, 2019
Ben Shepherd
Mega-regional trade agreements and Asia: An application of structural gravity to goods, services, and value chains
We use a flexible estimation and simulation platform built on the standard structural gravity model to analyze the trade and welfare implications of mega-regional trade agreements for Asian countries. Our counterfactuals suggest that all current mega-regional scenarios have the potential to generate significant export gains for Asian economies, but that welfare improvements are much lower relative to baseline. This finding suggests a political economy problem, as trade-related reallocations of l...
Jan 1, 2019
Stefano Ponte, Gary Gereffi, Gale Raj-Reichert (ed.)
Handbook on Global Value Chains
Global value chains (GVCs) are a key feature of the global economy in the 21st century. They show how international investment and trade create cross-border production networks that link countries, firms and workers around the globe. This Handbook describes how GVCs arise and vary across industries and countries, and how they have evolved over time in response to economic and political forces. With chapters written by leading interdisciplinary scholars, the Handbook unpacks the key concepts of G...
Jan 1, 2019
Raphael Kaplinsky, Mike Morris
Trade and Industrialisation in Africa: SMEs, Manufacturing and Cluster Dynamics
Trade in manufacturing through global and regional value chains has played an especially prominent role in global economic growth in recent decades. However, Africa faces severe challenges in growing manufacturing activities in the face of China and Southeast Asia’s competitive dominance of global manufactured product markets. Traditionally, global trade is heavily concentrated at the corporate level. But this reliance on large firms as a driver of trade is problematic for Africa given its nee...
Jan 1, 2019
Cosimo Beverelli, Victor Stolzenburg, Robert B. Koopman, Simon Neumueller
Domestic value chains as stepping stones to global value chain integration
Jan 1, 2019
Miaojie Yu
China’s manufacturing value chain ascent to date
This chapter utilizes total factor productivity (TFP) to measure the performance of large Chinese firms in 2001–2008. The upgrading of China’s manufacturing value chain that has resulted from integration with world markets has rich policy implications. The chapter describes the performance of the Chinese manufacturing sector, including total manufacturing products and manufacturing exports. It estimates and measures China’s TFP growth in manufacturing sectors using firm-level data and a se...
Jan 1, 2019
Stefan Pahl, Marcel P. Timmer
Do Global Value Chains Enhance Economic Upgrading? A Long View
Exporting through global value chains (GVCs) has recently been highlighted as a panacea for weak industrialisation trends in the South. We study the long-run effects of GVC participation for a large set of countries between 1970 and 2008. We find strong evidence for the positive effects on productivity growth in the formal manufacturing sector. This effect is stronger when the gap with the global productivity frontier is larger. However, we find no evidence for a positive effect on employment ge...
Jan 1, 2019
Mauro Boffa, Marion Jansen, Olga Solleder
Do we need deeper trade agreements for GVCs or just a BIT?
The paper investigates two policies geared towards stimulating and shaping global value chains (GVCs), namely deep regional trade agreements (DRTAs) and bilateral investment treaties (BITs). In an augmented gravity model, we test the impact of both policies on a variety of trade in value added indicators. We find that both policies are likely to increase GVC trade, although their transmission channels differ. While backward linkages are stimulated through both BITs and DRTAs, forward linkages re...
Jan 1, 2019
Laura Alfaro, Pol Antràs, Davin Chor, and Paola Conconi
Internalizing Global Value Chains: A Firm-Level Analysis
A key decision facing firms is the extent of control to exert over the different stages in their production processes. We develop and test a property rights model of firm boundary choices along the value chain. We construct firm-level measures of the upstreamness of integrated and nonintegrated inputs by combining information on firms’ production activities in more than 100 countries with input-output tables. Whether a firm integrates upstream or downstream suppliers depends crucially on the e...
Jan 1, 2019
Morris, M. and C. Staritz
Industrialization paths and industrial policy for developing countries in global value chains
Structural transformation to higher productivity and value-added activities remains a key objective for developing countries. Industrial policy has historically had an important role in supporting such transformation processes. Today, the external context is fundamentally different with the rise of global value chains (GVCs). This requires a reconceptualization of how GVCs shape industrialization paths and industrial policy options in developing countries. The chapter does this by (1) providing ...
Jan 1, 2019
Sourafel Girma, Holger Görg, Erasmus Kersting
Which boats are lifted by a foreign tide? Direct and indirect wage effects of foreign ownership
The attraction of foreign direct investment (FDI) is considered to be of particular importance for emerging economies because it represents a channel through which international convergence in standards of living may be achieved. One important effect of FDI is its impact on wages, both within the targeted firm (direct) and the local firms within the same geographic region and sector (indirect). In this paper, we investigate the question whether multinational enterprises (MNEs) raise or lower wag...
Jan 1, 2019
Vito Amendolagine, Andrea F. Presbitero, Roberta Rabellotti, Marco Sanfilippo
Local sourcing in developing countries: The role of foreign direct investments and global value chains
The local sourcing of intermediate products is one the main channels for foreign direct investment (FDI) spillovers. This paper investigates whether and how participation and positioning in the global value chains (GVCs) of host countries is associated to local sourcing by foreign investors. Matching two firm-level data sets on 19 Sub-Saharan African countries and Vietnam to country-sector level measures of GVC involvement, we find that more intense GVC participation and upstream specialization ...
Jan 1, 2019
Karishma Banga, Neil Balchin
Linking Southern Africa into South Africa’s global value chains
This study explores the potential for South Africa to become an engine for intra- regional trade and industrial development by linking other Southern African countries to its global value chains and, in the process, improving its global trade competitiveness. The study identifies ‘lead products’ exported by South Africa, and then uses revealed comparative advantage and unit cost analysis to identify intermediate inputs in which Southern African countries have competitiveness to export that i...
Jan 1, 2019
Rasmus Lema, Carlo Pietrobelli, Roberta Rabellotti
Innovation in global value chains
In this chapter, the authors focus on innovation in global value chains and on the role that such chains play in building and deepening capability. They also focus on the trajectories along which firms, located in developing countries, once inserted into global value chains acquire or lose innovation capability. To do so, they bring together the global value chains and innovation systems approaches. Their key arguments are that global value chains interact with innovation systems in multiple way...
Jan 1, 2019
Chiara Franco, Marco Sanfilippo, Adnan Seric
Investors’ characteristics and the business climate as drivers of backward linkages in Vietnam
This paper analyses the factors determining the establishment of backward linkages and their key features once established. To carry out our analysis, we exploit an original survey conducted in 2011 on roughly 1500 investors based in Vietnam. We show that some characteristics of the investor firm, including size, productivity, experience and autonomy in decision-making, affect the capacity of linkages to create a larger network of local suppliers. In addition, we show that it is the provision of...
Jan 1, 2019
Nikhil Patel, Zhi Wang, Shang‐Jin Wei
Global Value Chains and Effective Exchange Rates at the Country‐Sector Level
The real effective exchange rate (REER) is one of the most cited statistics in open‐economy macroeconomics. We show that the models used to compute these numbers are not rich enough to allow for the rising importance of global value chains. Moreover, because different sectors within a country participate in international production sharing at different stages, sector‐level variations are also important for determining competitiveness. Incorporating these features, we develop a framework to c...
Jan 1, 2019
Gale Raj-Reichert
Global Value Chains, Contract Manufacturers, and the Middle-Income Trap: The Electronics Industry in Malaysia
The electronics industry has been a cornerstone to the successful industrialisation process in Malaysia since the 1970s. However, since the 2000s the industry, which is deeply integrated in global value chains, has failed to upgrade. Its stagnation is indicative of the general economic situation in Malaysia which has contributed to its middle-income trap. This paper argues two key factors combined have led to the electronics industry’s inability to upgrade within the global value chain. First ...
Jan 1, 2019
Victor Stolzenburg, Daria Taglioni, Deborah Winkler
Economic upgrading through global value chain participation: which policies increase the value-added gains?
The emergence of global value chains has opened up new ways to achieve development and industrialization. However, new evidence shows that not all countries have gained from participating in global value chains, and that country-specific characteristics matter for economic upgrading in global value chains. Using a panel data set of developing and industrialized countries at the sectoral level, this chapter first finds that global value chain participation as a buyer and especially as a seller in...
Jan 1, 2019
Michael Brüntrup
Agricultural growth corridors in sub-Saharan Africa – new hope for agricultural transformation and rural development?
Agricultural growth corridors – areas along a central transport line that receive intensive agricultural investments – are a recent approach to economic development in sub-Saharan Africa. Since they are usually planned and managed as strategic private-public partnerships, they promise to bring together expertise, funding and coordination that are usually dispersed and aim to benefit from multiple synergies that arise. There are, however, huge pitfalls to overcome: on the input side the chall...
Jan 1, 2019
World Bank
World Development Report 2020: Trading for Development in the Age of Global Value Chains
Global value chains (GVCs) powered the surge of international trade after 1990 and now account for almost half of all trade. This shift enabled an unprecedented economic convergence: poor countries grew rapidly and began to catch up with richer countries. Since the 2008 global financial crisis, however, the growth of trade has been sluggish and the expansion of GVCs has stalled. Meanwhile, serious threats have emerged to the model of trade-led growth. New technologies could draw production close...
Jan 1, 2019
Ismail Doga Karatepe, Christoph Scherrer
Collective Action as a Prerequisite for Economic and Social Upgrading in Agricultural Production Networks
This article highlights the importance of collective action and the role of the state in upgrading the social and economic conditions of farmworkers and smallholders. It is argued that economic upgrading does not automatically translate into social upgrading for workers and small producers and explores the conditions conducive to social upgrading. The asymmetric power relations among actors in the agricultural value chain erect barriers that hinder social upgrading of smallholders and farmworker...
Jan 1, 2019
Davin Chor
Modeling global value chains: approaches and insights from economics
In recent years, the emergence of global value chains in how firms organize their production strategies has drawn the attention of economists, particularly those in the field of international trade. This has spawned a growing body of applied theoretical work to capture the fragmentation of production and sourcing decisions across country borders. This chapter overviews this literature on economic models that speak to the broad phenomenon of global production. It elucidates the core modeling appr...
Jan 1, 2019
Pamina Koenig, Sandra Poncet
Social responsibility scandals and trade
This paper studies the effect of social responsibility scandals on the imports of consumer products, by focusing on an event which generated massive consumer mobilization against neglecting firms, namely the collapse of the Rana Plaza building affecting the textile industry in Bangladesh. We investigate the import repercussions of this major shock in the perceived quality of clothing producers sourcing in Bangladesh. In line with the well-documented home bias in trade and home-country media slan...
Jan 1, 2019
Keppner, Benno, Daniel Weiß, Pietro Bertazzi, Bibiana García
Beyond Rhetoric: Why Foreign Policy Needs to Foster Private Sector SDG Implementation.
From conflict prevention to human rights protection – companies are vital for the success of the 2030 Agenda and foreign policy alike. But progress on SDG implementation in the business world is at a turning point. Foreign policy can and must play a decisive role by building a robust knowledge base, making use of economic diplomacy instruments and bringing trade and foreign direct investment in line with the SDGs. adelphi's volume "Driving Transformative Change: Foreign Affairs an...
Jan 1, 2019
Pamina Koenig and Sandra Poncet
Reputation and (un)fair trade: Effects on French importers from the Rana Plaza collapse
This paper analyzes the effects of a major reputational shock affecting textile importers fromBangladesh. The collapse of the Rana Plaza building in April 2013 generated a surge of activismand media coverage specifically targeting the firms that sourced from the factories affected bythe disaster. Using monthly firm-level import data from French Customs, we ask whether therewas any disruption in these firms’ imports from all origins, and specifically from Bangladesh.We use a difference-in-diffe...
Jan 1, 2019
Neil M. Coe, Henry Wai-chung Yeung
Global production networks: mapping recent conceptual developments
In this framing paper for the special issue, we map significant research on global production networks during the past decade in economic geography and adjacent fields. In line with the core aim of the special issue to push for new conceptual advances, the paper focuses on the central elements of GPN theory to showcase recent rethinking related to the delimiting of global production networks, underlying political-economic drivers, actor-specific strategies and regional/national development outco...
Jan 1, 2019
Arthur Blouin, Rocco Macchiavello
Strategic Default in the International Coffee Market
This article studies strategic default on forward sale contracts in the international coffee market. To test for strategic default, we construct contract-specific measures of unanticipated changes in market conditions by comparing spot prices at maturity with the relevant futures prices at the contracting date. Unanticipated rises in market prices increase defaults on fixed-price contracts but not on price-indexed ones. We isolate strategic default by focusing on unanticipated rises at the time ...
Jan 1, 2019
Gale Raj-Reichert
The powers of a social auditor in a global production network: the case of Verité and the exposure of forced labour in the electronics industry
Research on labour governance actors in global production networks (GPNs) has been limited to civil society organisations, firms and governments. Understanding the influence of actors in GPNs has been dealt with singular and overt modes of relational power. This paper contributes to both debates by examining an intermediary actor—the social auditing organisation Verité—and its exercise of multiple modes of overt and covert powers to illustrate the complex terrain of change in GPNs. Verité,...
Jan 1, 2019
Inga Heiland, Andreas Moxnes, Karen-Helene Ulltveit-Moe, Yuan Zi
Trade From Space: Shipping Networks and The Global Implications of Local Shocks
This paper examines the structure of the shipping network and its implications on global trade and welfare. Using novel data on the movements of container ships, we calculate optimal travel routes. We then estimate the impact of a shock to the network on global trade by means of a natural experiment: the 2016 Panama Canal expansion. Trade between country pairs using the canal increased by 9-10% after the expansion. While the building costs were borne by Panama alone, a model-based quantification...
Jan 1, 2019
Asmita Parshotam, Javier Revilla Diez
Economic Growth Corridors Through a Value-Chain Lens: The Case of the Southern Agricultural Growth Corridor in Tanzania
Tanzania’s Southern Agricultural Growth Corridor (SAGCOT) is a role-model economic growth corridor (EGC). It aims at easing the incorporation of smallholder farmers into global and regional value chains through partnerships with larger agricultural companies. EGCs in general and SAGCOT in particular are not only about upgrading infrastructure. They in fact address numerous challenges to local producers, including the lack of finance and knowledge relating to markets and production as well as t...
Jan 1, 2019
Stefan Pahl, Marcel P. Timmer
Patterns of vertical specialisation in trade: long-run evidence for 91 countries
The authors estimate the domestic value-added content in exports of manufacturing goods (VAX-D ratio) for 91 countries over the period from 1970 to 2013. They find a strong decline in the world VAX-D ratio since the mid-1980s mostly accounted for by the substitution of foreign for domestic intermediates. Using a breakpoint detection method, they identify three waves of vertical specialisation in the world economy: 1970–1979, 1986–1995 and 1996–2008. The authors find that most countries (79...
Jan 1, 2019
Stefan Pahl, Marcel P. Timmer, Reitze Gouma, Pieter J. Woltjer
Jobs in Global Value Chains: New Evidence for Four African Countries in International Perspective
What is the potential for job growth in Africa under participation in global value chains (GVCs)? In this study the concept of GVC jobs is introduced which tracks the number of jobs associated with GVC production of goods. A novel decomposition approach is used to account for GVC jobs by three proximate sources: global demand for final goods, a country's GVC competitiveness (measured as the country's share in serving global demand) and technology (workers needed per unit of output). Ba...
Jan 1, 2019
Matteo Fiorini, Bernard Hoekman, Marion Jansen, Philip Schleifer, Olga Solleder, Regina Taimasova, Joseph Wozniak
Institutional design of voluntary sustainability standards systems: Evidence from a new database
Voluntary sustainability standards (VSS) have become a significant element of the governance of international trade and production. Even though VSS are not mandatory (required by law), in practice they are often necessary for producers to participate in global value chains. Finally, VSS are often considered costly for producers. This article provides an overview of the global VSS landscape, and addresses the following questions: how producer‐friendly are VSS, and how do their practices towards...
Jan 1, 2019
Amendolagine, V., Chaminade, C., Guimón, J., & Rabellotti, R.
Cross-border Knowledge Flows Through R&D FDI: Implications for Low-and Middle-income Countries.
R&D related foreign direct investments represent a powerful mechanism for cross-border knowledge sharing that can stimulate the process of technological catch-up. However, low-income countries and smaller middle-income countries remain largely excluded from this kind of global flows of knowledge. In this chapter, we discuss the motivations and implications of this type of FDI for low and middle income countries, building on a critical review of the existing literature and analyze the traject...
Jan 1, 2019
M. Kaplan, K. Vorwerk, S. Leiderer
From the Paris Declaration to the 2030 Agenda: Is the global sustainability agenda overburdening development cooperation?
Jan 1, 2019
Emily Blanchard
Trade wars in the global value chain era
The nature of global commerce has changed dramatically over the past 40 years, with the meteoric rise of global value chain trade. This column, taken from a recent Vox eBook, builds on insights from recent research to identify three critical dimensions of global value chain trade that promise to make today’s trade wars more economically costly and more politically complex than previous trade wars.
Jan 1, 2019
Antonio Andreoni, Ha-Joon Chang
The political economy of industrial policy: Structural interdependencies, policy alignment and conflict management
Industrial policy is back in the mainstream debates. The paper provides a long-term analytical perspective of the industrial policy debate, and it critically assesses the current mainstream phase of the debate in light of three fundamental theoretical insights that developed along several decades of industrial policy theory and practice. These are related to the (i) structural interdependencies, tensions and dualism arising in the industrialisation process; (ii) variety and types of institutions...
Jan 1, 2018
Xiaolan Fu, Jun Hou, and Xiaohui Liu
Unpacking the Relationship between Outward Direct Investment and Innovation Performance: Evidence from Chinese firms
This study investigates the impact of outward direct investment (ODI) by Chinese MNEs on innovation performance and the conditions under which such an impact is moderated, based on a sample of Chinese firms. The empirical evidence suggests that undertaking ODI leads to an increase in the innovation performance of these Chinese firms. The impact of ODI on innovation is contingent on firm characteristics such as in-house R&D, strategic orientation, and international experiences as well as cont...
Jan 1, 2018
Dennis Davis, Raphael Kaplinsky, Mike Morris
Rents, Power and Governance in Global Value Chains
This paper addresses the generation of rents and the distribution of gains in the global operations of governed Global Value Chains (GVCs) and seeks to provide an architecture for analyzing the governance of GVCs. It distinguishes between four sets of rent—gifts of nature; innovation rents; exogenously defined rents; and market power—and three spheres of governance—setting the rules -“legislative governance”; implementing the ...
Jan 1, 2018
Andrea Andrenelli, Charles Cadestin, Koen De Backer, Sébastien Miroudot, Davide Rigoi, Ming Ye
Multinational production and trade in services
Using the OECD analytical AMNE database, this paper provides new evidence on the services activities of multinational enterprises (MNEs) and discusses the relationship between cross-border trade in services and the production of services through foreign affiliates (“mode 3” trade in services in the General Agreement on Trade in Services). An econometric analysis indicates that policies restricting trade in services (as captured in the OECD Services Trade Restrictiveness Index) are associated...
Jan 1, 2018
Thomas Farole, Claire Hollweg and Deborah Winkler
Trade in Global Value Chains: An Assessment of Labor Market Implications
The paper is structured in six further sections following this introduction. Section two develops a conceptual framework, and reviews the literature on the relationship between trade integration and labor market outcomes. Section three outlines the empirical framework and data used in the analysis. Section four presents results on the relationship between overall trade integration (through exports) and labor market outcomes. Section five then focuses specifically on GVC trade, and assesses the r...
Jan 1, 2018
Marcel P. Timmer, Sébastien Miroudot and Gaaitzen J. de Vries
Functional specialisation in trade
Production processes are fragmenting across borders with countries trading tasks rather than products. Export statistics based on value added reveal a process of vertical specialisation. Yet, what do countries do when exporting? In this article, we provide novel evidence on functional specialisation (FS) in trade. We find surprisingly large and pervasive heterogeneity in specialisation across countries. A positive (negative) correlation between GDP per capita and specialisation in R&D (fabri...
Jan 1, 2018
Quanrun Chen, Kunfu Zhu, Peng Liu, Xiangyin Chen, Kailan Tian, Lianling Yang, Cuihong Yang
Distinguishing China’s processing trade in the world input-output table and quantifying its effects
Distinguishing processing trade is crucial to national input-output table-based research on China's international trade. This paper further investigates the importance of distinguishing China's processing trade in multicountry input-output table-based studies. We focus on the bias in China's bilateral trade in value added caused by China's undistinguished processing trade. We construct a product-by-product world input-output table capturing China's processing trade based...
Jan 1, 2018
Carlo Pietrobelli, Anabel Marin, Jocelyn Olivari
Innovation in mining value chains: New evidence from Latin America
The paper investigates new opportunities for innovation and linkages associated to mining activities in Brazil, Chile and Peru. Three types of opportunities were researched: demand side, supply side and local specificities. The last source of opportunities is key for natural resource related activities. The evidence shows that an increasing demand is introducing important incentives for innovation and local suppliers. Nevertheless, a hierarchical value chain, dominated by few large firms, and po...
Jan 1, 2018
Ari Van Assche, Johannes Van Biesebroeck
Functional upgrading in China’s export processing sector
Functional upgrading occurs when a firm acquires more sophisticated functions within an existing value chain. In this paper, we analyze if there is evidence of this type of upgrading in China's export processing regime by investigating dynamics in the relative prevalence of Import & Assembly (IA) versus Pure Assembly (PA) processing trade over the period 2000–2013. Firms in both regimes provide similar manufacturing services to foreign companies, but IA firms also conduct the sophisti...
Jan 1, 2018
Laurie S.M. Reijnders and Gaaitzen J. de Vries
Technology, offshoring and the rise of non-routine jobs
This paper documents the growing share of non-routine jobs in the labor force of thirty-seven advanced and emerging countries over the period 1999–2007. To examine the role of offshoring and technological change in driving this labor market development, we develop a task-based model of production in global value chains and propose a decomposition of changes in occupational labor demand. In the setup of the model, technological change affects the total number of workers with a certain occupatio...
Jan 1, 2018
Davin Chor, Pol Antràs
On the measurement of upstreamness and downstreamness in global value chains
This paper offers four contributions to the empirical literature on global value chains (GVCs). First, we provide a succinct overview of several measures developed to capture the upstreamness or downstreamness of industries and countries in GVCs. Second, we employ data from the World Input-Output Database (WIOD) to document the empirical evolution of these measures over the period 1995-2011; in doing so, we highlight salient patterns related to countries’ GVC positioning – as well as some pu...
Jan 1, 2018
Philipp Harms, Jakob Schwab
Like it or not? How the economic and institutional environment shapes individual attitudes towards multinational enterprises
This paper analyses the determinants of people's attitudes towards foreign direct investment (FDI) using a survey‐based data set that covers a wide range of rich and poor countries. We find that both individual socioeconomic characteristics and macroeconomic and institutional factors shape agents’ attitudes towards multinational firms. Moreover, we find that the influence of an individual's characteristics—such as education and the status as an entrepreneur—on her/his perspecti...
Feb 1, 2017
Jennifer Bair, Stefano Ponte, Leonard Seabrooke, and Duncan Wigan.
Entangled chains of global value and wealth
In recent decades multinational enterprises have developed ways to reorganize production and trade through Global Value Chains (GVCs), and to manage assets and liabilities through Global Wealth Chains (GWCs). This co-evolution has permitted the hyper-extraction of labor and natural resources through financial and legal technologies, entangling value creation and wealth accumulation. While scholars have separately acknowledged the role that GVCs and GWCs play in generating distributional outcomes...
Jan 1, 2017
Holger Görg, Erasmus Kersting
Vertical integration and supplier finance
This paper studies access to finance by suppliers that are linked to a multinational enterprise. The theoretical framework consists of a property rights model featuring suppliers that are either vertically integrated or sell to the multinational at arm's length, which in turn affects the availability of different sources of credit. Integrated suppliers are predicted to cover a relatively larger share of their costs using internal sources, consisting of initial wealth plus funds from the mul...
Jan 1, 2017
Axel Berger, Dominique Bruhn
Vietnam’s Preferential Trade Agreements: Implications for GVC Participation and Upgrading
Vietnam is a lower-middle–income country and, like many of its peers, faces the challenge of upgrading to higher value-added tasks in global value chains (GVCs). Participation and upgrading are not an arbitrary policy objective: both may be of decisive importance for Vietnam’s future economic development path. While the economy currently is highly competitive in relatively low-skilled, labor-intensive tasks, history has shown that wages eventually will rise and this comparative advantage wil...
Jan 1, 2017
Antràs, Pol, Teresa C. Fort, Felix Tintelnot
The Margins of Global Sourcing: Theory and Evidence from U.S. Firms
We develop a quantifiable multi-country sourcing model in which firms self-select into importing based on their productivity and country-specific variables. In contrast to canonical export models where firm profits are additively separable across destination markets, global sourcing decisions naturally interact through the firm's cost function. We show that, under an empirically relevant condition, selection into importing exhibits complementarities across source markets. We exploit thes...
Jan 1, 2017
Philipp Harms, Pierre-Guillaume Méon
Good and useless FDI: The growth effects of greenfield investment and mergers and acquisitions
We explore the effect of foreign direct investment (FDI) on economic growth, distinguishing between mergers and acquisitions (M&As) and “greenfield” investment. A simple model underlines that, unlike greenfield investment, M&As partly represent a rent accruing to previous owners, and do not necessarily contribute to expanding the host country's capital stock. Greenfield FDI should therefore have a stronger impact on growth than M&A sales. This hypothesis is supported by our ...
Jan 1, 2017
Altenburg Tilman and Dani Rodrik
Green industrial policy: Accelerating structural change towards wealthy green economies
The Chapter discusses the conceptual foundations of green industrial policy. Altenburg and Rodrik explain why looking through the lens of industrial policy provides important insights for a green transformation. They summarize lessons learned from decades of experimentation with, and research on, industrial policy and bring out key principles of smart policymaking that maximize the government’s ability to overcome market failures while keeping the inherent risks of misallocation and political ...
Jan 1, 2017
Wen Chen, Bart Los, Philip McCann, Raquel Ortega-Argilés, Mark Thissen, Frank van Oort
The continental divide? Economic exposure to Brexit in regions and countries on both sides of The Channel
In this paper we employ an extension of the World Input‐Output Database (WIOD) with regional detail for EU countries to study the degree to which EU regions and countries are exposed to negative trade‐related consequences of Brexit. We develop an index of this exposure, which incorporates all effects due to geographically fragmented production processes within the UK, the EU and beyond. Our findings demonstrate that UK regions are far more exposed than regions in other countries. Only region...
Jan 1, 2017
Jennifer Bair, Mathew Mahutga, Marion Werner, and Liam Campling
Capitalist crisis in the “age of global value chains”
In this article, we analyze the strategies, surprises, and sidesteps in the World Bank’s 2020 World Development Report, Trading for Development in the Age of Global Value Chains. Strategically, the Report promotes an expansion of neoliberal globalization couched in the language of global value chains. Curiously detached from the broader academic literature on global value chains in international trade, it promotes a sequentialist vision of global value chain upgrading that evokes the stagism o...
Jan 1, 2017
Loren Brandt, Johannes Van Biesebroeck, Luhang Wang, Yifan Zhang
WTO Accession and Performance of Chinese Manufacturing Firms
We examine the effects of trade liberalization in China on the evolution of markups and productivity of manufacturing firms. Although these dimensions of performance cannot be separately identified when firm output is measured by revenue, detailed price deflators make it possible to estimate the average effect of tariff reductions on both. Several novel findings emerge. First, cuts in output tariffs reduce markups, but raise productivity. Second, pro-competitive effects are most important among ...
Jan 1, 2017
Aksel Erbahar, Yuan Zi
Cascading trade protection: Evidence from the US
In a world with increasingly integrated global supply chains, trade policy targeting upstream products has unintended consequences on their downstream industries. In this paper, we examine whether protection granted to intermediate manufacturers leads to petition for protection by their downstream users. We first provide a simple model based on the quantitative framework of Ossa (2014) which identifies the key factors and their interactions that cause cascading protection to motivate our empiric...
Jan 1, 2017
Ahmad, N, Primi A.
From domestic to regional to global: Factory Africa and factory Latin America?
This chapter provides a brief overview of upgrading and GVC terminologies, providing insights on interpretability pitfalls. It offers evidence of the complementarities between strong domestic supply chains and imports and then demonstrates the importance of strong regional value chains for integration at a global level. And to illustrate the complementarities, it ends with examples of broad and targeted policies that countries are implementing for the motor vehicle value chain.
Jan 1, 2017
Emily Blanchard
Renegotiating NAFTA: The role of global supply chains
The Trump administration has been outspoken in its criticism of NAFTA, which the president has called “the worst deal ever made”. This column, taken from a recent Vox eBook, argues that reversing the current NAFTA policy environment would not simply wind back the clock to the pre-agreement economy from 20-plus years ago. Instead, it would throw spanners and blockages into today’s very different and deeply integrated North American economy.
Jan 1, 2017
Carlo Pietrobelli, Cornelia Staritz
Upgrading, Interactive Learning, and Innovation Systems in Value Chain Interventions
Value chain interventions are increasingly used by donors in the context of private sector development. The paper develops a typology of such interventions, and presents the case of one multilateral lending institution – the Inter-American Development Bank. It argues that interventions risk transforming into an empty label and that an understanding of core global value chain (GVC) concepts, such as power, governance, and rents, is necessary. Further, interventions need to consider different le...
Jan 1, 2017
Ximena Rueda, Rachael D. Garrett, and Eric F. Lambin
Corporate investments in supply chain sustainability: Selecting instruments in the agri-food industry
Private investments to address environmental issues are perceived as a powerful engine of sustainability. For the agri-food sector, multiple instruments have been developed to green supply chains. Yet little is known about the underlying process and conditions under which green sourcing concerns lead to the adoption of specific sustainability instruments among agri-food companies. This study: i) offers a synthesis of the most commonly used instruments agri-food companies adopt to promote sustain...
Jan 1, 2016
Thomas Farole
Do global value chains create jobs?
Global value chains (GVCs) describe the cross-national activities and inputs required to bring a product or service to the market. While they can boost exports and productivity, the resulting labor market impacts vary significantly across developing countries. Some experience large-scale manufacturing employment, while others see a shift in demand for labor from manufacturing to services, and from lower to higher skills. Several factors shape the way in which a country’s labor market will be i...
Jan 1, 2016
Rajesh SN Raj, Kunal Sen
Moving out of the bottom of the economy? Constraints to firm transition in the Indian informal manufacturing sector
The predominant type of firms in developing countries is small family firms and the self-employed in the informal sector. Very few family firms make the transition to larger firms employing non-family labour. In this paper, we examine the reasons for the low presence of firms employing non-family labour in the informal sector, using a firm-level data set drawn from nationally representative repeated cross-sectional surveys of the Indian informal manufacturing sector. We find that the key constra...
Jan 1, 2016
Kalina Manova, Zhihong Yu
How firms export: Processing vs. ordinary trade with financial frictions
The fragmentation of production across borders allowsfirms to make and exportfinal goods, or to perform only in-termediate stages of production by processing imported inputs for re-exporting. We examine howfinancial frictionsaffect companies' choice between processing and ordinary trade–implicitly a choice of production technology andposition in global supply chains–and how this decision affects performance. We exploit matched customs and bal-ance sheet data from China, where exports ar...
Jan 1, 2016
Mi Dai, Madhura Maitra, Miaojie Yu
Unexceptional exporter performance in China? The role of processing trade
The firm level trade literature finds that exporters are exceptional performers for a wide range of countries and measures. Paradoxically, the one documented exception is the world's largest exporter, China. We show that this puzzling finding is entirely driven by firms that engage only in export processing — the activity of assembling tariff exempted imported inputs into final goods for resale in the foreign markets. We find that processing exporters are less productive than non-processi...
Jan 1, 2016
Sebastian Krautheim, Tim Schmidt-Eisenlohr
Wages and International Tax Competition
We introduce wage bargaining and private information into a model of profit shifting and tax competition between a large and a small country. Shifting profits to the small country not only reduces a firm's tax bill but also creates private information on profitability, altering the wage bargaining in favor of the firm. This additional shifting incentive makes the tax base of the large country more elastic and leads to higher outflows, lower wages, higher firm profits and lower equilibrium t...
Jan 1, 2016
Taglioni, D.; Winkler, D.
Making Global Value Chains Work for Development
Economic, technological, and political shifts as well as changing business strategies have driven firms to unbundle production processes and disperse them across countries. Thanks to these changes, developing countries can now increase their participation in global value chains (GVCs) and thus become more competitive in agriculture, manufacturing and services. This is a paradigm shift from the 20th century when countries had to build the entire supply chain domestically to become competitive in...
Jan 1, 2016
KUNAL SEN, CHAITALI SINHA
The location choice of US foreign direct investment: how do institutions matter?
We look at the institutional determinants of both within- and across-country variations in US foreign direct investment (FDI) flows over time. The strength of our approach is that in contrast to the previous work that has focused on average FDI flows across countries, we are able to explain both the variations in FDI flows across and within countries for a given year. Our core hypothesis is that in countries with high quality of contract enforcement, multinationals are more likely to invest in t...
Jun 3, 2015
Rocco Macchiavello and Ameet Morjaria
The Value of Relationships: Evidence from a Supply Shock to Kenyan Rose Exports
This paper provides evidence on the importance of reputation in the context of the Kenyan rose export sector. A model of reputation and relational contracting is developed and tested. A seller’s reputation is defined by buyer’s beliefs about seller’s reliability. We show that (i) due to lack of enforcement, the volume of trade is constrained by the value of the relationship; (ii) the value of the relationship increases with the age of the relationship; and (iii) during an exogenous negativ...
Jan 1, 2015
Rocco Macchiavello, Ameet Morjaria
The Value of Relationships: Evidence from a Supply Shock to Kenyan Rose Exports
This paper provides evidence on the importance of reputation in the context of the Kenyan rose export sector. A model of reputation and relational contracting is developed and tested. A seller's reputation is defined by buyer's beliefs about seller's reliability. We show that (i) due to lack of enforcement, the volume of trade is constrained by the value of the relationship; (ii) the value of the relationship increases with the age of the relationship; and (iii) during an exogenou...
Jan 1, 2014
Jennifer Bair, Matthew C Mahutga
Power, governance and distributional skew in global value chains: Exchange theoretic and exogenous factors
The relationship between power, governance and value creation/capture is a central concern in global value chain (GVC) research. In the context of calls to develop a more expansive view of power in GVCs, we argue for retaining a focus on bargaining power, but shifting the conceptualization of bargaining power from the dyad to the network. We advance two arguments. First, we elaborate an exchange theoretic model in which skew of value capture is a function of the degree of power asymmetry inheren...
Jan 1, 2014
Kishore Gawande, Bernard Hoekman, Yue Cui
Global Supply Chains and Trade Policy Responses to the 2008 Crisis
The collapse in trade and the contraction of output that occurred during 2008–9 was comparable to, and in many countries more severe than, the Great Depression of the 1930s. However, it did not give rise to the rampant protectionism that followed the Great Crash. The idea that the rise in the fragmentation of production across global value chains – vertical specialization – may be a deterrent against protectionism is underappreciated in the literature. Institutions also played a role in li...
Jan 1, 2014
Bernard Hoekman
Supply Chains, Mega-Regionals and Multilateralism: A Road Map for the WTO
At the 9th Ministerial Conference of the WTO in Bali it was agreed to develop a work program to conclude the long-running Doha round. This report argues that any work program should recognize that goods and services are increasingly produced in international supply chains. Many of the policies impacting on supply chain trade are on the negotiating table; others are not. The WTO takes a “silo approach”, addressing policy areas in isolation. This may reduce the relevance of WTO agreements as t...
Jan 1, 2014
Thomas Farole and Deborah Winkler
Making Foreign Direct Investment Work for Sub-Saharan Africa: Local Spillovers and Competitiveness in Global Value Chains
Economic, technological, and political shifts as well as changing business strategies have driven firms to unbundle production processes and disperse them across countries. Thanks to these changes, developing countries can now increase their participation in global value chains (GVCs) and thus become more competitive in agriculture, manufacturing and services. This is a paradigm shift from the 20th century when countries had to build the entire supply chain domestically to become competitive int...
Jan 1, 2014
Cuihong Yang, Erik Dietzenbacher, Jiansuo Pei, Xikang Chen, Kunfu Zhu, Zhipeng Tang
Processing Trade Biases the Measurement of Vertical Specialisation in China
Vertical specialization (VS) is often measured by the import contents of the exports, using an input–output (I–O) framework. Half of China’s exports are processing exports, which largely depend on imported intermediate inputs and tie up upstream as well as downstream trade partners. Thus, one would expect to find strong VS for China. Using the ‘ordinary’ I–O tables, however, this is not the case. Because the production of processing exports is only a small part of total production, t...
Jan 1, 2013
Shujin Zhu and Xiaolan Fu
Drivers of Export Upgrading
This paper analyses the determinants of export upgrading using a cross-country panel dataset over the 1992–2006 period. The results suggest that the export sophistication of countries is enhanced by capital deepening, engagement in knowledge creation, transfers via investment in education and R&D and foreign direct investment and imports. Institutional quality also facilitates the export upgrading of countries. The effect of natural resources on the structural upgrading of exports appears ...
Jan 1, 2013
William Milberg, Deborah Winkler
Outsourcing Economics: Global Value Chains in Capitalist Development
Jan 1, 2012
David Kaplan
South African mining equipment and specialist services: Technological capacity, export performance and policy
South Africa has developed a technologically sophisticated and globally competitive mining equipment and specialist services sector. The paper provides evidence for and measurement of technological competency and global competitiveness and a brief outline of why South Africa was successful in this regard. While there are significant prospects for future growth, there are, at the same time, a number of constraints and South Africa is becoming a less advantageous site for both production and for i...
Jan 1, 2012
Philipp Harms, Oliver Lorz, Dieter Urban
Offshoring along the production chain
In this paper, we analyze the offshoring decision of firms whose production process is characterized by a particular sequence of steps. International cost differences vary non‐monotonically along the production chain, and moving unfinished goods across borders incurs transport costs. We show that, in such a setting, firms may refrain from offshoring even if relocating individual steps would be advantageous in terms of offshoring costs, or they may offshore (almost) the entire production chain ...
Jan 1, 2012
Mike Morris, Raphael Kaplinsky, David Kaplan
“One thing leads to another”—Commodities, linkages and industrial development
With a particular focus on low income economies in SSA, this paper addresses the nature and determinants of linkages from the commodities sectors and challenges the received view that enclave development is an inherent characteristic of resource extraction, particularly in the hard and energy commodities sectors. It argues that there has been a steady increase in linkage development and that there are significant opportunities for deepening this process. The opportunities may be greater for back...
Jan 1, 2011
Xiaolan Fu
Processing Trade, FDI and the Exports of Indigenous Firms: Firm-Level Evidence from Technology-Intensive Industries in China
This study examines the impact of processing trade‐foreign direct investment (FDI) on the export competitiveness of indigenous firms using disaggregated firm‐level production data and product‐level trade data from China covering the 2000–07 period. The estimation results show that processing trade‐FDI has generated significant positive information spillover effect on the export performance of indigenous firms. However, its technology spillovers effect on the development of internationa...
Jan 1, 2011
Andreas Stamm, Christian von Drachenfels
Value Chain Development: Approaches and activities by seven UN agencies and opportunities for interagency cooperation
Promoting value chain development is increasingly being recognized as a promising approach to address not only economic development, job creation and inclusive growth, but a wider range of social and environmental development issues. The paper outlines the different approaches and perspectives that seven UN agencies apply in their work on value chain development. It also points to some of the challenges the UN system is facing in enhancing its effectiveness and coherence and offers some initial ...
Jan 1, 2008
Andreas Stamm
Agribusiness and poverty reduction: what can be learned from the value chain approach?
The Millennium Development Goals (MDGs), adopted by the Millennium Summit of 2000 commit the international community to a strategy of accelerated poverty reduction. The proportion of people living under conditions of extreme poverty should be reduced by half by the year 2015 (MDG 1). The MDGs are today the most significant point of reference for international development policy, cooperation and research (see e.g. Fues and Loewe 2005). The commitment to MDG has led to intensified research on th...
